Life Insurers' Investments Look Fine: Moody's

Today, the analysts say, CLOs account for only about $60.5 billion of U.S. life insurers' assets, or about 1.5% of the cash and invested assets they held at the end of 2017.

About 55% of life insurers' CLOs have ratings of A or above.

But about one-third of life insurers' CLOs either have no Moody's ratings or have had their Moody's ratings withdrawn, the analysts note.

But 90% of the CLOs unrated by Moody's have high ratings from the National Association of Insurance Commissioners' Securities Valuation Office, the analysts say.

In addition, most of the CLOs life insurers buy are tied to loans made to big companies, rather than to small and midsize businesses, the analysts say.

Exposure to other types of potentially risky assets, such as commercial mortgage loans, has been increasing at a modest pace, and insurers have focused on lending to borrowers in the top two borrower rating quality categories, the analysts write.

— Read In Leveraged Loans, It's Beginning to Look a Lot Like 2008, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.