Blackstone’s earnings more than double in 2Q

Inflows of $18.9bn into credit and insurance account for nearly half of the total $37.3bn.

Blackstone Group said its second-quarter net income more than doubled to $1.31 billion, or $1.82 a share, from a year earlier. The firm’s total assets under management jumped 21 percent to a record $684 billion on strong performance and inflows of $37.3 billion.

Inflows into its credit and insurance platform increased $18.9 billion in the quarter, accounting for more than half of the firm’s total inflows and dwarfing real estate, the platform with the second-highest sector inflows, at $8.9 billion. Credit and insurance AUM rose 26 percent to $173.7 billion in the quarter.

Private credit had a gross return of 4.8 percent on improved fundamentals and as spreads tightened across public and private holdings. Perpetual capital surged 55 percent from the previous year to $169.5 billion. That will increase when Blackstone completes a recently announced deal to manage part of the assets of insurance company American International Group and pay it $2.2 billion for a 9.9 percent stake in its life insurance and retirement services unit.

Blackstone will begin by managing $50 billion of AIG’s Life & Retirement portfolio, with that amount increasing to $92.5 billion over the next six years. The AIG deal, part of a trend by fund managers to increase their access to permanent capital, is expected to increase Blackstone’s insurance AUM to about $150 billion by year-end.

The firm recorded its best-ever quarter of fund appreciation, with Stephen Schwarzman, chairman and chief executive officer, saying in a news release that strong investment performance and the firm’s “culture of innovation” had allowed Blackstone to “meaningfully broaden” its client base, including individual investors and insurance companies, as well as the types of investments it can make.

Blackstone’s net management fees increased 16 percent in the quarter to $171.6 billion, while fee-related performance revenues soared 77 percent to $15.1 billion.