Commercial Delinquencies Fall, but Others Rise

The delinquency rate on commercial mortgages owned by life insurance companies fell to 0.85% at the end of the first quarter of 1998, the seventh straight quarterly decline, according to data from the American Council of Life Insurance.Commercial mortgages make up approximately 92% of life companies' total mortgage investments. However, because delinquencies in the agricultural sector exploded from 0.97% at year-end 1997 to 2.04% for the first quarter, and single-family residential delinquencies increased 20 basis points to 1.99% during the same period, the overall delinquency rate for the first quarter was up 2 bp to 0.94%. This is the first increase in the overall rate since June 1996. The ACLI noted that life companies have been returning to mortgage investments after years of selling off such assets. The overall portfolio increased from $174.2 billion at the end of 1997 to $175.1 billion as of March 31, 1998. Commercial investments increased during the period from $159.6 billion to $161.0 billion.