The percentage of mortgage loan investments increased in 2012 to 11.4% from 11% in 2011. For the same period, private placement corporate investments increased to 16.3% from 15.1%.
Structured securities, which Fitch defined as agency pass-throughs, commercial mortgage-backed securities, nonagency residential MBS and asset-back securities, made up 25% of these companies’ bond portfolios; corporate bonds made up 62%.
Fitch noted the overall quality of insurer commercial loan portfolios remains solid. It pointed out 94% of commercial loans have a loan-to-value ratio under 80% as of the end of last year, up from 91% for yearend 2011.
Another strong point is less than 6% of commercial mortgage loan investments have a debt service coverage ratio of less than 1.0 times.