Losses on U.S. life insurers’ commercial real estate holdings are manageable, a rating agency says in a new report.

Moody’s Investors Service, New York, says that despite being hurt by bad commercial mortgage loans and commercial mortgage-backed securities, life insurers’ losses will be less than those of both banks and the general market, Moody’s concludes in itsreport.

Although insurers’ commercial real estate losses will grow for the immediate future, their commercial real estate investments are of high enough quality to make the losses manageable, says Moody’s.

“In our expected case scenario, we anticipate losses of approximately $10 billion for insurers over the next 2 to 3 years, which will dampen earnings but should not result in many rating downgrades,” stated Jeffrey Berg, a senior vice president of Moody’s.

U.S. life insurer exposure to CMLs, CMBS, and real estate equity is about 16% of invested assets and 150% of regulatory capital, which Moody’s deems moderate. The life industry was much more heavily exposed to the commercial real estate markets 20 year ago when the last commercial real estate downturn occurred, and the industry has learned from its past mistake, Berg said.

About 11% of life insurers’ invested assets are in mortgage loans, according to Highline Data, a sister company of the National Underwriter.