US insurers’ investments in CRE near $1trn

Written by Adam Cadle

04/11/2024

The US insurance industry’s exposure to commercial real estate (CRE) totalled $995bn as of year-end 2023, or 11.7% of the industry’s total cash and invested assets, according to the NAIC.

Life insurance companies are the third largest lender to the CRE market, accounting for 15.7% of outstanding commercial mortgages.

As of year-end 2023, US insurance companies’ exposure to mortgage loans increased 5.9% compared to the prior year to $770bn, with 84% of the total in commercial mortgage loans. Mortgages loans accounted for 9.4% of the US insurance industry’s total cash and invested assets and around 13.8% of life companies’ cash and invested assets.

Challenges in CRE are largely concentrated in the office sector, as the lodging and retail sector have experienced improvements from prior pandemic-related difficulties, and supply dynamics in the multifamily and industrial sectors are well-balanced.

The share of office and retail properties in U.S. insurers’ commercial mortgage loan portfolio decreased to 20% and 15%, respectively, with both sectors facing challenges due to paradigm shifts.

Refinancing risk in the commercial mortgage loan portfolio has risen when compared to a year ago with approximately 51% of commercial mortgages maturing in the next five years.

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