Life Insurers to Create Affordable Housing Investment Vehicles

What You Need to Know

The new affiliate will develop fixed-rate, investment-grade investment products.
The assets inside the products could include multi-family rental properties and homeownership access loans.
The affiliate is a product of the ACLI Economic Empowerment and Racial Equity initiative.

U.S. life insurers hope to use part of their trillions of dollars in assets to help more people of color get affordable homes.

The American Council of Life Insurers announced last week that it will be starting a nonprofit affordable housing investment partnership.

The partnership will use cash from 36 founding life insurer partners to develop affordable, sustainable housing, the ACLI said.

The partnership will have a board that will identify community development and affordable housing projects, and it likely will create opportunities for the member insurers to invest in fixed-rate, investment-grade, long-term investment instruments that are suitable for life insurers’ investment portfolios, the ACLI added.

“No exact financial target will be set for partnership initiative investments,” the ACLI noted.

What It Means

If the new partnership succeeds, U.S. life insurers could end up investing less money in low-yielding financing for high-cost housing, often in waterfront locations that are vulnerable to flooding and windstorms, and more in affordable housing.

The Investment Partnership

The new affordable housing partnership is the result of the ACLI’s Economic Empowerment and Racial Equity initiative. The ACLI and member insurers started the initiative in response to the shock following the May 25, 2020, death of George Floyd, a Black Minneapolis resident who died, while he was being recorded with a phone camera, as a police officer kneeled on his neck.

ACLI Chairman Scott Davison suggested, in a comment about the new partnership, that the affordable housing investment initiative could lead to investments in other types of community development activities.

“Our aim is to establish an investment ecosystem that empowers life insurers to partner with philanthropy, private capital and government-sponsored entities to meet fundamental needs of underserved communities, especially communities of color, beginning with affordable housing,” Davison said.