A study of the investment portfolio of 34 life insurance groups by Fitch Ratings, Chicago, found they have made a modest allocation shift into less liquid assets, including commercial mortgage loans, as interest rates are still at historically low levels.
The percentage of
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.
