S&P Global Ratings: Life Insurers’ CRE Exposure ‘Manageable’

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The credit quality U.S. life insurers commercial real estate exposure remains high, driven by the conservative, diversified nature of its investment in the space, according to S&P Global Ratings, New York.

“The U.S. life insurance industry’s exposure to commercial real estate across commercial mortgage loans, commercial mortgage-backed securities, and real estate equity has grown over the last decade but has plateaued in the last few years,” S&P Global Ratings said in a new non-rating report, Commercial Real Estate Exposure At U.S. Life Insurers: It’s All About The Office, But It’s Manageable (subscription).

The report noted the office sector is experiencing stress, but said the magnitude is “very limited” within life insurers’ commercial mortgage loan portfolios.

“While life insurers will likely incur some losses from mortgages on office properties in the next few years, the combination of high credit quality and limited exposure will keep these losses manageable,” S&P Global Ratings Credit Analyst Carmi Margalit said. “We will continue to monitor this sector through our ongoing surveillance and as more data emerges over time.”