A.M. BestTV: U.S. Insurers’ Exposure to Real Estate Investment Changes

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FOR IMMEDIATE RELEASE

OLDWICK - FEBRUARY 03, 2016 01:48 PM (EST)
In this ^A.M.BestTV episode, A.M. Best Senior Industry Research Analyst Jason Hopper discusses the previous and current roles that commercial real estate investments have within the portfolios of insurers. Click on http://www.ambest.com/v.asp?v=realestate216 to view the entire program.

In a recent Best’s Special Report, titled, “Commercial Real Estate Exposures for Insurers—A Total Picture,” it states that over a period of 10 years the level of commercial mortgage loan exposure increased by about 36% to just under $394 billion in 2014.

“Most of that exposure, about 98%-99%, is concentrated within the life/annuity segment, which makes sense since their liability structure tends to be a lot longer,” said Hopper. “Additionally, the longer duration of their commercial mortgage loans fits within their asset/liability management framework and strategy.”

Hopper also said that from an exposure perspective as a percentage of capital, the picture becomes clearer when considering these real estate asset classes on a combined basis. “When you take all of these exposures together—real estate-owned, commercial mortgage loans, commercial mortgage-backed securities, real estate investment trusts—all in total they account for a little over 150% of total capital within the life/annuity industry. About 20% was in the health segment and approximately 10% was in the property/casualty segment.”

To access a copy of the special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=245344 .

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