Allied World Financial Services Company, a subsidiary of Allied World Assurance Company, has entered into strategic partnership with MatlinPatterson, a US-based private equity and hedge fund firm, to expand its asset management business.

Allied World chairman and CEO Scott Carmilani said, ”This agreement will allow for a collaborative approach to investing in liquid credit strategies and is designed to maximize flexibility while maintaining a multi-year capital commitment."

As part of the agreement, the company will offer growth capital for continued expansion of MatlinPatterson’s asset management platform as its minority owner.

MatlinPatterson in return will manage $500m of Allied World’s portfolio in existing and future liquid credit strategies.

The financial services company was established to diversify its earnings stream with business relationships, which will complement its property and casualty business, besides adding additional value to shareholders.

Allied World senior vice president and chief investment officer John Gauthier added, "The goal of the Financial Services Company is to further the expertise of Allied World, while participating in the returns, as an owner, with trusted investment management and other business leaders."

New York-based Berkshire Capital Securities had advised Allied World on this transaction.