With commercial mortgage loans showing strong returns on yields over bonds, the U.S. life/annuity industry continues to stand behind mortgage loans as a viable investment, according to a recent release.
"The Best’s Special Report, titled, 'Mortgage Loans Remain an Attractive Investment for Insurers,' states that the L/A industry’s investment in mortgage loans has risen to nearly $500 billion at year-end 2017 from $350 billion in 2012, and that the L/A industry now holds approximately 15% of the roughly $3.14 trillion commercial mortgage debt in the United States," according to a BusinessWire press release.
"Growth rates of around 8.5% in each of the last three years have pushed mortgages as a proportion of the segment’s total invested assets to 11.8% in 2017—the largest allocation since 2000—from 9.8% in 2011. Overall, the performance of the L/A industry’s mortgage loan holdings has been solid, with less than 1% consistently classified as problem loans (loans delinquent 90 days or more, in the process of foreclosure or have already been foreclosed)."
According to the report, apartment buildings have been the top focus for many insurers. Investments in apartment buildings have been rising 15% annually over the last four years.
To learn more about the positive outlook for insurance investors in the commercial mortgage space, click on the image above.