Whereas Frost took the road less traveled, we insurance portfolio managers can take two (or more!) roads at once as we forge a path that delivers on our investment objectives.
Bank lending and deal flow on the decline, economic stress on the rise and some of the best yields our teams have seen. It’s a surprisingly good time for private credit.
Adding durable, low-cost external leverage to lower-volatility assets via the FHLB system can be an attractive way to enhance risk-adjusted return potential versus owning higher-volatility assets with more embedded leverage directly on insurance company balance sheets.
Higher investible yields and elevated volatility have combined to create meaningful opportunities for insurance companies with the willingness and ability to capitalize.
SASBs in the industrial, multi-family and life sciences spaces are compelling. Higher-yielding office and retail CMBS aren’t worth the reach … yet.
Changing the risk-based capital framework is likely to increase charges on BBB, BB and B rated tranches of collateralized loan obligations (CLOs).
In our view, valuations appear reasonable and private equity remains a compelling way for insurers to gain exposure to alternatives.