Research — May 9, 2025
Record resi investment changes nature of US life industry's mortgage holdings
By Tim Zawacki and Husain Rupawala
The ongoing rotation of the US life insurance industry's mortgage investments into nontraditional property types have meaningfully altered the composition of their investment portfolios in a variety of ways.
Direct investments in mortgage whole loans across all property types rose to new highs on absolute and relative bases in 2024, according to S&P Global Market Intelligence's analysis of disclosures on annual statutory filings. Based on aggregate book value excluding accrued interest of $787.30 billion, mortgages constituted just under 14.0% of the industry's general account cash and invested assets. Life insurers in 2024 allocated a new high of $151.88 billion to the acquisition of — and additional investment in — mortgage loans.
But the industry has taken a decidedly different approach to arrive at those record values, with several leading groups continuing a pivot that has unfolded over the past several years to loans backed by residential properties as opposed to a more traditional emphasis on large commercial loans. Residential mortgages accounted for 14.5% of the industry's overall whole-loan positions as of year-end 2024, up from just 4.6% five years earlier. Residential mortgage loan acquisitions have more than quadrupled in terms of aggregate cost and more than tripled on a relative basis during that five-year period. They surged by 50.7% in 2024, alone, to $48.23 billion.
Beyond portfolio composition, this shift has served to push out the weighted-average duration of life insurers' mortgage investments and increased loan-to-value ratios, reflecting the nature of the typical residential loan. It also has caused some very incremental deterioration in overall credit quality.
As we have observed an increasing number of residential mortgage aggregators targeting insurance company general accounts for product distribution, we view the shift as being more of a secular trend than a fleeting fad.
The US life subsidiaries of Athene Holding Ltd. ranked as the largest acquirers and holders of residential mortgage loans in 2024 by a wide margin over its closest rival, Global Atlantic Financial Group Ltd.'s US life companies.
Based on a sum-of-the-parts review of disclosures on Schedule B of annual statutory statements, we found that Athene's US life units acquired $16.11 billion in uninsured residential mortgages in 2024 and ended the year with uninsured residential mortgage holdings of $30.54 billion. Global Atlantic's US life companies had acquisitions and holdings of $8.59 billion and $19.88 billion in the asset class. The other US life group with more than $10 billion in uninsured residential mortgage loans on the books of its general accounts at year-end 2024 was Corebridge Financial Inc. with $10.93 billion.
Although Athene's positions accounted for just over one-third of the US life industry's 2024 uninsured residential mortgage acquisitions and 27.4% of the industry's holdings, the 2024 expansion was not driven by the Apollo Global Management Inc.-backed group's growth alone. Uninsured residential mortgage acquisitions for the industry, excluding Athene, surged by 53.4% on a year-over-year basis. The latter change would have been even stronger in the absence of the approximately $3.8 billion in residential whole loans added in 2023 by Teachers Insurance & Annuity Association of America in connection with the sale of its former thrift.
The group led by Massachusetts Mutual Life Insurance Co. increased its investment in uninsured residential mortgages by 54.0% to $8.12 billion in 2024, fueled by acquisitions of $4.17 billion. It had acquisitions of residential whole loans of $2.51 billion and $2.63 billion in 2022 and 2023, respectively.
National Life Insurance Co.'s Life Insurance Co. of the Southwest, with uninsured residential mortgage acquisitions of $960.2 million in 2024, perhaps offered the industry's most dramatic rotation to that property type from certain commercial exposures. The insurer said in the management's discussion and analysis section of its annual statement that residential properties accounted for 20.0% of its real estate debt and equity exposure as of year-end 2024 as compared with only 3.0% at the end of 2023. It showed declines in relative concentrations in the retail, office, apartment, industrial and other commercial property types during the year.
The Ares Management Corp.-linked Aspida Life Insurance Co. dramatically accelerated its residential mortgage loan investments at a pace well in excess of its rapid balance sheet growth. New acquisitions of uninsured residential loans of $286.6 million helped the annuity writer build upon holdings that totaled only $1.6 million at the end of 2023.
Several life insurers new to the property type helped boost the industry's overall tally. AuguStar Life Insurance Co., for example, said that it launched a new residential mortgage loan program targeting what it described as "high-quality borrowers, conservative loan-to-value ratios and geographic diversification." The company and its affiliates, which are subsidiaries of Constellation Insurance Inc., acquired uninsured residential mortgages with aggregate actual cost of $542.0 million in 2024, up from zero during the previous five years, with a majority of the activity by dollar value coming in the fourth quarter. Similarly, the group led by Pacific Life Insurance Co. showed uninsured residential mortgage loan acquisitions of $639.9 million in 2024 after having last engaged in such activity in 2020.
Relative concentrations in residential mortgages varied widely among those life insurers that were active in the asset class in 2024, from the low-single digits of net admitted cash and invested assets to in excess of 30% at Oceanview Life & Annuity Co., First Trinity Financial Corp. and SECU Life Insurance Co., the latter of which purchases its mortgages exclusively from parent State Employees CU.
Direct and indirect ties to residential mortgage originators and/or aggregators help explain the increase in loan acquisitions across the life industry. But there remains substantial opportunity for greater breadth and depth of investment. While the number of life groups and stand-alone entities that had $100 million or more in uninsured residential mortgages on their books increased to 29 in 2024 from 25 in 2023, there remained 35 groups and top-tier entities that held $1 billion or more in mortgage loans backed by nonresidential properties that had no residential exposure whatsoever.
The significant increase in residential mortgages has had a discernable impact on relevant credit quality statistics that industry servers should bear in mind when evaluating overall trends. For example, our analysis of data reported on Note 5 of annual statements shows that uninsured residential mortgages have a 30-plus day delinquency rate of 4.57%, or 316 basis points higher than the other types of mortgages held by insurers on a combined basis. According to the supplemental investment risks interrogatories pages of annual statements, the share of mortgages with loan-to-value ratios of 81% and higher totaled 9.8% at year-end 2024 as compared with just 2.9% in 2019.
The rotation into residential mortgages has also been beneficial for both new money and gross yields on investment. We calculate a weighted average effective interest rate of 6.08% for uninsured residential mortgage investments in general accounts as of year-end 2024 as compared with 4.80% for nonresidential loans. In addition to the apparent incremental yield-enhancement, uninsured residential mortgages in good standing also benefit from lower risk-based capital charges than the highest-rated commercial mortgages, at 0.68% and 0.90%, respectively, on a pretax basis.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.