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U.S. Insurers' Mortgage Holdings Kept Growing in 2020: NAIC

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What You Need to Know

  • The value of mortgages on retail properties fell 2.2%.
  • Multifamily housing holdings grew 6%.
  • Life insurers accounted for about 15% of commercial and multfamily mortgage originations earlier this year.

U.S. insurers ended up with 4% more exposure to mortgage loans at the end of 2020 than they had a year earlier.

The mortgage lending total increased to $626 billion from $602 billion, according to a new report from the Capital Markets Bureau, a division of the National Association of Insurance Commissioners.

Life insurers accounted for $601 billion of the 2020 total.

Life insurers were responsible for 15% of the U.S. commercial and multifamily mortgage loan value outstanding at the end of the first quarter of this year, according to Mortgage Bankers Association data cited by the NAIC analysts.

The Context

The latest Federal Reserve Board financial accounts report shows that total U.S. life insurer general account financial assets increased 11%, to $6.4 trillion, between the end of 2019 and the end of 2020.

Investments in mortgage loans make up about 9.4% of life insurers’ financial assets.

Life insurers use investments in corporate bonds, mortgage-backed securities and other instruments, including mortgage loans, to generate much of the cash used to pay insurance policy and annuity contract benefits.

The Details

Here’s what happened to the total value of insurers’ mortgage loan exposure in five sectors:

  • Multifamily housing: $164 billion (up 6%).
  • Office: $147 billion (up 2.4%).
  • Retail: $105 billion (down 2.2%).
  • Industrial: $85 billion (up 17%).
  • Lodging: $24 billion (up 1.1%).

(Image: Adobe Stock)