US Alt IM-backed insurers bring higher but manageable risk
Written by Adam Cadle
31/05/2024
US Alt-IM backed insurers bring higher but manageable risk, Fitch Ratings has said.
The credit profile of Alt-IM backed insurers differs from that of the broader industry, which can add credit risk.
Furthermore, Fitch Ratings director, Douglas Baker, said: "Alt-IM backed insurers tend to exhibit increased investment risk, higher regulatory scrutiny and uncertainty around the long-term willingness and ability of Alt IMS to support the insurance operations.”
However, Baker stated that the asset origination capabilities and added financial flexibility of an Alt-IM partner can be advantageous.
Relative to the broader life insurance industry, Alt IM-backed insurers allocate a higher proportion of their portfolios to structured securities and private asset classes while often having higher allocations to lower-rated instruments. Additionally, Alt IM-backed insurers exhibit higher allocation to commercial mortgage loans.
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