Life insurers may be taking on a little more investment risk than they used to, but only a little more, and even the holdings getting the most scrutiny seem pretty safe.
Shachar Gonen and other analysts at Moody’s Investors Service have given that assessment of life insurers’ investments in a new report.
(Related: Meet the Collateralized Fund Obligation)
The analysts note that leveraged loans and collateralized loan obligations (CLOs) have been getting more attention, and that life insurers invest in both types of assets.
A leveraged loan is a loan made to a borrower who has a weak credit history or a large amount of debt.
A CLO is a security backed by a pool of loans.
Today, the analysts say, CLOs account for only about $60.5 billion of U.S. life insurers’ assets, or about 1.5% of the cash and invested assets they held at the end of 2017.