|By ALEXANDRA STEVENSON|
Insurance companies just get can’t enough for their money these days. Interest rates are at all-time lows and even
Flush with trillions of dollars, these once staid institutions are taking on bigger, flashier and riskier investments. Consider the latest billion-dollar deal: Among the players behind the
“They really don’t have the luxury of sitting on cash,” said
Among the most attractive investments for insurers are businesses that were once the domain of large banks, like lending to companies. Banks are getting squeezed out of these businesses under new regulation in the wake of the financial crisis. More lightly regulated investment firms like hedge funds and private equity have stepped in to fill the void.
Insurers are interested in making commercial mortgage loans and direct loans to middle market companies, according to Goldman, which surveyed insurers with more than a combined
“We’ve seen the banks withdrawing from these markets, and that is leaving opportunity for insurers to lend directly,”
Chinese insurers, whose base of policyholders is growing, have been encouraged by the government to invest overseas, spurring a flurry of headline-grabbing investments. Last year, the once-obscure
But as insurers make riskier investments, some in the industry have warned of the pitfalls that could affect policyholders one day.
“Any time an entity takes on an unknown or new risks, there are always possibilities of things going wrong,” said
“You had tens of thousands of policyholders, all of which would have had to scramble to find new policies,” he added.
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|Source:||New York Times Digital|