Allstate's Sam Davis

Life insurance companies have been one of the capital sources that have stepped into the breach caused by the debt markets’ seizure. The conventional wisdom is that insurers are filling their real estate allocations by seeking out the best deals in this environment. In many instances this is the case [see this week's related article Life Insurance Firms Still Fill the Lending Breach ]. However an alternative point of view is provided by Sam Davis, senior managing director and head of real estate for Allstate’s commercial real estate investment activities – a $20 billion real estate portfolio that consists of commercial mortgages, commercial mortgage backed securities and equity real estate fund investments.While Davis is not projecting a wholesale pull-back by life insurers from real estate; he does believe life insurance companies will be re-evaluating the real estate asset class’ role in their portfolios. For developers who are counting on this lending, the news is not good. “It’s my prediction that life insurers will scale back their investments in real estate this year,” Davis says.

GlobeSt.com: Why would life insurers want to temper their real estate exposure?

Stein: A couple of reasons. One has to do with the economy in general. It is slowing down and life insurance companies only invest from the cash flow they are bringing in the door. If invest-able cash flow is down, so are their investments.