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Another Impending Financial Crisis?
Staff Reporters
According to industry sources, should commercial real-estate turn out to be the next focus of the financial crisis, life insurers will be among the companies feeling the most heat.
Life Insurance Companies
According to the Dow Jones Newswires, on11/20/2008, life insurers on average have the equivalent of about 41% of their equity invested in Commercial Mortgage-Backed Securities [CMBS], compared with 23% on average for property/casualty insurers.
The Fox-Pitt Kelton Report
According to a recent analysis of 10 large public insurers by Fox-Pitt Kelton analyst, Adam Klauber, Hartford Financial Services Group (HIG); Protective Life (PL) and MetLife (MET) had the highest exposures.
Assessment
Investment banks, by contrast, held about 18% of their equity in CMBS. While the financial crisis has come late to the life insurance industry, it has hit them hard. Shares of life insurers are down nearly 72% so far this year, a bigger drop than for other types of insurers.
Conclusion
Now – forget CitiGroup – what about the health insurers? Your thoughts and comments on this Executive-Post are appreciated.
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Filed under: Insurance Matters, Investing, Practice Management, Research & Development, Risk Management, Surveys and Voting | Tagged: cmbs, toxic cmbs | 2 Comments »
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