Vlad Barbalat - Investing $120 Billion in Permanent Capital

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at colossus.com.

**SPEAKER_2** (1:53)
Patrick O'Shaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUMVC.

**Patrick O'Shaughnessy** (2:21)
My guest today is Vlad Barbalat, the Chief Investment Officer of Liberty Mutual Investments, the $120 billion investment platform that sits within one of the largest insurance companies in the world. Vlad grew up in Soviet Moldova, came to America in 1990 and built a career that eventually led him to one of the most distinctive capital allocator seats anywhere in finance. Today we talk about how the mutual insurance structure creates a unique investment platform, what Liberty looks for in a new deal or partner, and what it means to build a career and a life in a country that gave you opportunities you never would have had anywhere else. Please enjoy my great conversation with Vlad Barbalat.
Vlad, this is going to be a fascinating conversation given that you sit in one of the most interesting investment seats probably in the world. I think to give people context, the right place to start is for you just to describe the platform, how much money you manage, how it's managed, why that platform is unique and different. The seat itself is so interesting to me, and then we'll go into all the things that you've learned sitting in the seat and building the platform. But first, just ground us in what is the thing, how big is it, how does it work?

**Vlad Barbalat** (3:22)
The thing is the balance sheet of one of the largest insurance companies in the world, one of the most diversified insurance companies in the world, Liberty Mutual Group, which has two primary insurance businesses that ultimately feed the investment platform.
First is the one that probably most are familiar with, the Liberty Jingle, which is our personalized business, one of the largest in the US, that of course is the home and auto component of our business. Then there is the business that is much more global in nature and really serves a sophisticated set of companies, brokers, partners, providing commercial and specialty insurance across many domains of business. Those two insurance businesses ultimately feed an investment platform that takes the reserves, as well as the surplus capital of Liberty Mutual Group, and invest it for the benefit of our balance sheet, ultimately for the benefit of our policyholders so that we can ensure that our promises are always met and have the financial strengths behind them. We are about $120 billion in capital. What's interesting about our platform is that it allows us an incredibly unique way of behaving as investors, which is to say we are focused not on any form of third-party capital, which has lots of benefits but also lots of challenges when you manage money.