Life insurers had a loss of 1.92% on their commercial mortgage investments in 2Q13, the first time this has occurred since the fourth quarter of 2008, according to the LifeComps Commercial Mortgage Loan Index. The same rise in Treasury rates that affected the residential side of the business during the quarter also had an impact here.
The loss wiped out any
The loss is because of a drop in the price component. Income from the investments was 1.29%, but price lost 3.21% for the period. LifeComps explained pricing was hit hardest by a sharp upward shift in the Treasury yield curve for maturities greater than one year. Yields on the 10-year Treasury increased 65 basis points over the quarter.
For the quarter, industrial properties had the best performance, a 119 bp loss; followed by office, a 183 bp loss; apartment, a 218 bp loss; and retail, a 233 bp loss.
The cumulative 12-month return on life company commercial mortgage investments was 4.24%.
