Leveraged bank loans, as defined by the NAIC, include institutional loans, amortizing term loans and revolving credit facilities, and may be classified among disclosures of bond holdings on Schedule D of annual statements. Aggregate carrying value in senior secured and unsecured bank loans associated with airlines Air Canada, American Airlines Group Inc., Delta Air Lines Inc., United Airlines Holdings Inc., WestJet Airlines Ltd. The particular area of focus of each individual issuer is not made readily apparent in the data, but a review of disclosures finds some exposure to certain industries that have been hit hard by recent economic dislocation. Excluding bank loans, securities with those designations fell to 4.1% of total bond holdings from 4.4%. life industry bond investments in bonds with designations of NAIC-3 or lower declined to 5.2% of total bond holdings from 5.3% in 2018. In 2018, bank loans represented 1.3% of total bond investments and 18% of bond holdings with designations of NAIC-3 or lower. life industry bond investments, they represented 22.2% of total bonds with designations of NAIC-3 or lower. While bank loans accounted for just 1.5% of total U.S. Designations of NAIC-1 and NAIC-2 pertain to investments with investment-grade ratings. The designation of NAIC-3 or less by the National Association of Insurance Commissioners corresponds to ratings of BB+ and below as published by S&P Global Ratings and select other rating agencies. A majority of the industry's investments were classified as senior secured debt.
More than 76.5% of the year-end 2019 total pertained to investments with NAIC designations of NAIC-3 or below. life insurers was $47.41 billion as of Dec. The aggregate carrying value of affiliated and unaffiliated bank loans reported on Schedule D of annual statements by U.S. life insurance industry in 2019 increased its direct exposure to leveraged bank loans, an asset class typically characterized by higher yields and lower ratings relative to more traditional general account investments.Īlthough the overall dollar value of holdings of below-investment-grade bonds decreased relative to total net invested assets, based on S&P Global Market Intelligence data compiled March 23, the aggregate value of bank loans with designations of between NAIC-3 and NAIC-6 grew on both absolute and relative bases.
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