Question

Insurance companies typically invest large amounts of excess funds from premiums or make long-term loans, particularly...

Insurance companies typically invest large amounts of excess funds from premiums or make long-term loans, particularly to businesses in the form of

1.commercial real estate loans.

2.car loans.

3.premium loans.

4.high-risk securities

5.funds to banking institutions.

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Answer #1

Answer is 1. Commercial Real Estate loans

In order to mtach their long duartion liabilities, life insurers generally look out for other assets which are of long duration. Bonds make up a major part of their portfolio, but then they have comparatively lower yields.

An Insurance Commercial Real Estate Loan is a mortgage that is provided by a life insurance company or conglomerate of life insurance companies and is secured by a first lien position on the subject property being financed. It is basically used to enhance the yields of the investments of life insurance companies. This serves the purpose of commercial real estate, which starved for credit, access to capital and insurers get a diversified investment profile, better yields and better asset liability management.

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