January 22, 2010
Fitch is predicting that US Life Insurers (a la MetLife) may be looking at an additional $15B in commercial real estate related losses. The estimate is that they have taken about 25% of the losses thus far, and most of the losses will take place within the next two years.
The life insurers have already booked about $5 billion in such losses since the economic crisis began, bringing the expected total to $20 billion, Douglas L. Meyer, a Fitch analyst, said today in an interview. Most future losses will be taken this year and in 2011, he said.
“The U.S. life industry has a large exposure to CRE- related assets through direct mortgage origination, investments in commercial mortgage-backed securities, and to a lesser degree, investment in real estate equity,” Fitch wrote in a note to clients.
Still, the delinquency rates on life insurer loans are far below what they are at the CMBS or community bank levels.
[via Business Week]
- Life Insurers 2010 Losses Estimated at $10B
- S&P on Insurers and CRE
- Prudential CRE US Quarterly Update
- Moody’s: CRE Prices Will Continue To Fall
- Commercial/Multi-Family Delinquency Rates Continue Hike Up