The survey participants originated $44.7 billion of new mortgages last year, some $7-billion or so more from the prior year. Almost all, or approximately 94%, of these new originations were fixed rate loans and most, or 90%, fell in the category of “New Business/Financing” which implies refinancing of maturing loans.

Aside for the increase in originations, the breakout of the activity is largely the same from the previous year. Lending was evenly distributed across property types with office and multifamily garnering 26% and 24%, respectively, of the total dollar volume.

Retail and industrial each represented about 20% of the originations.

The weighted-average LTV and DSCR on the new loans were 59% and 2.24x, respectively, slight improvements over the previous years. The credit quality of insurance companies' mortgages, as measured by the National Association of Insurance Commissioner's new Commercial Mortgage (CM) Test Scores, is strong with 93% of the insurance companies maintained high concentration to both CM1 -- the highest-rated capital requirement by NAIC -- and CM2 categories.

Paradkar also noted that losses were minimal for these originations, which makes the uptick in originations all the more telling. “It points to strong underwriting discipline,” she said.

The survey also looked at insurance company holdings in their own portfolios, which included an allocation to commercial mortgages. Here, though, there was no dramatic jump in volume, or rather allocations.Commercial mortgage holdings averaged 11.08% of total invested assets for survey participants, a 40 basis points increase from year-end 2014.

NAIC's Comprehensive Look at Insurers' Portfolio

Separately, one of the industry industry's main regulators, the National Association of Insurance Commissioners, has done its own analysis of US insurance companies' investments releasing its findings earlier this month in a new update for the year ended Dec. 31, 2015. The analysis looked at 4,800 insurers in the fraternal, health, life, P/C and title companies that filed their annual statements with the NAIC and state insurance departments.

NAIC's findings also reflected the steady-but-not-dramatically-growing role of commercial mortgages within these portfolios that the CREFC-Trepp study found.

It reported that:

Mortgage loans on real estate at year-end 2015, comprised mainly of first-lien loans, totaled $427 billion on a book/adjusted carrying value (BACV) basis and accounted for 7% of total cash and invested assets in 2015. This was a $34 billion increase from year-end 2014 and a total of $97 billion growth since year-end 2011. Insurers have increased their holdings of mortgages in each of the last four years ended 2015, but at a relatively conservative rate; mortgages, as a percentage of insurers' total assets, have remained in the 6.5% to 7% range from 2011 through 2015.

The bulk of the NAIC's report, not surprisingly, focuses on the nuanced investment strategies by insurance companies in bonds, which comprises the bulk of their portfolios.

How the CREFC-Trepp Survey Came About

That is one difference between the NAIC and the CREFC-Trepp survey. Another is the latter's information on performance of these assets. NAIC doesn't really address this while the entire Raison d'être for the CREFC-Trepp survey is this information.

CREFC, before it rebranded as a capital markets association for the entire commercial real estate industry, largely represented the CMBS industry. After the financial crash it decided to broaden its membership and approached other capital market providers with the interesting proposition of a survey that would aggregate competitive performance data. No participant would see a specific company's performance data -- but the aggregate data would provide a much-needed benchmark for the insurance companies, as well as provide a peek into this piece of the capital markets industry for the rest of us. The life insurance companies bit and since then have become active members in CREFC.

Some of the data from the survey is made public, but the most interesting tidbits are available only to the survey respondents as another inducement to participate.

Performance Data from This Survey

Still, the data points that are revealed can be telling. In this latest report delinquencies have risen slightly as have problem loans. Realized losses arising from foreclosures and non-distressed sale increased significantly, meanwhile, while realized losses from the write-downs and other, discounted pay-off and restructured loan categories decreased. Specifically:

• The total realized net losses in the general accounts and subsidiary entities of survey participants were 0.01% as of Q4 2015, which was a slight drop from a year earlier, when losses were measured at 0.04%.

• Delinquencies recorded by survey participants within their general account holdings and subsidiary entities averaged 0.18% during the second half of 2015, up 0.02% from year-end 2014. Most of the delinquencies reported as of Q4 2015 fell into the 90+ days delinquent category.

• Problem loans were 0.17% in Q4 2015, which was a 14 basis point increase when compared to the second-half of 2014 of 0.03%. Based on the data collected, a few small and large firms reported higher delinquencies when compared to previous years and it was mainly concentrated in the small loan segment.

• For the realized losses reported in this survey, 37.82% were generated from foreclosures, 29.90% from write-downs and other, 11.78% from discounted payoffs and 16% from non-distressed sales. Distressed note sales and restructured loans accounted for the remaining 4.49% of total realized losses. Realized losses arising from foreclosures and non-distressed sale increased significantly by 24% and 16%, respectively, while realized losses from the write-downs and other, discounted pay-off and restructured loan categories decreased by approximately 18%, 10% and 13%, respectively, when compared to year-earlier levels.

• As of Q4 2015 the average LTV ratio held within the participating company portfolios remained relatively stable at 55.6% when compared to year-end 2014. Only 0.5% of loan exposure for all companies had a LTV ratio greater than 100%. The average DSCR (NOI) for the portfolios was 2.15x, which is a 13 bps increase over the year-earlier level. 96.9% of all exposure held was above a 1.0x DSCR. The LTV's are now below where they were during the last peak in market values in 2006-2007.

WASHINGTON, DC--Life insurance company commercial mortgage originations shot up last year by 21% compared to originations in 2014, according to the preliminary results of the CREFC/Trepp Portfolio Lender Survey for the second-half of 2015. The biannual survey in which 25 insurance companies participate, tracks the performance of their combined $204 billion in loan exposure.

The main reason for the increase in originations was the need for greater yield, Sonal Paradkar, assistant vice president of Product Management at Trepp told GlobeSt.com.

Parakdar presented the results at the Portfolio Lenders Forum during the CRE Finance Council 2016 Annual Conference underway in New York this week.

The Stats Behind $44.7B in New Mortgages

The survey participants originated $44.7 billion of new mortgages last year, some $7-billion or so more from the prior year. Almost all, or approximately 94%, of these new originations were fixed rate loans and most, or 90%, fell in the category of “New Business/Financing” which implies refinancing of maturing loans.

Aside for the increase in originations, the breakout of the activity is largely the same from the previous year. Lending was evenly distributed across property types with office and multifamily garnering 26% and 24%, respectively, of the total dollar volume.

Retail and industrial each represented about 20% of the originations.

The weighted-average LTV and DSCR on the new loans were 59% and 2.24x, respectively, slight improvements over the previous years. The credit quality of insurance companies' mortgages, as measured by the National Association of Insurance Commissioner's new Commercial Mortgage (CM) Test Scores, is strong with 93% of the insurance companies maintained high concentration to both CM1 -- the highest-rated capital requirement by NAIC -- and CM2 categories.

Paradkar also noted that losses were minimal for these originations, which makes the uptick in originations all the more telling. “It points to strong underwriting discipline,” she said.

The survey also looked at insurance company holdings in their own portfolios, which included an allocation to commercial mortgages. Here, though, there was no dramatic jump in volume, or rather allocations.Commercial mortgage holdings averaged 11.08% of total invested assets for survey participants, a 40 basis points increase from year-end 2014.

NAIC's Comprehensive Look at Insurers' Portfolio

Separately, one of the industry industry's main regulators, the National Association of Insurance Commissioners, has done its own analysis of US insurance companies' investments releasing its findings earlier this month in a new update for the year ended Dec. 31, 2015. The analysis looked at 4,800 insurers in the fraternal, health, life, P/C and title companies that filed their annual statements with the NAIC and state insurance departments.

NAIC's findings also reflected the steady-but-not-dramatically-growing role of commercial mortgages within these portfolios that the CREFC-Trepp study found.

It reported that:

Mortgage loans on real estate at year-end 2015, comprised mainly of first-lien loans, totaled $427 billion on a book/adjusted carrying value (BACV) basis and accounted for 7% of total cash and invested assets in 2015. This was a $34 billion increase from year-end 2014 and a total of $97 billion growth since year-end 2011. Insurers have increased their holdings of mortgages in each of the last four years ended 2015, but at a relatively conservative rate; mortgages, as a percentage of insurers' total assets, have remained in the 6.5% to 7% range from 2011 through 2015.

The bulk of the NAIC's report, not surprisingly, focuses on the nuanced investment strategies by insurance companies in bonds, which comprises the bulk of their portfolios.

How the CREFC-Trepp Survey Came About

That is one difference between the NAIC and the CREFC-Trepp survey. Another is the latter's information on performance of these assets. NAIC doesn't really address this while the entire Raison d'être for the CREFC-Trepp survey is this information.

CREFC, before it rebranded as a capital markets association for the entire commercial real estate industry, largely represented the CMBS industry. After the financial crash it decided to broaden its membership and approached other capital market providers with the interesting proposition of a survey that would aggregate competitive performance data. No participant would see a specific company's performance data -- but the aggregate data would provide a much-needed benchmark for the insurance companies, as well as provide a peek into this piece of the capital markets industry for the rest of us. The life insurance companies bit and since then have become active members in CREFC.

Some of the data from the survey is made public, but the most interesting tidbits are available only to the survey respondents as another inducement to participate.

Performance Data from This Survey

Still, the data points that are revealed can be telling. In this latest report delinquencies have risen slightly as have problem loans. Realized losses arising from foreclosures and non-distressed sale increased significantly, meanwhile, while realized losses from the write-downs and other, discounted pay-off and restructured loan categories decreased. Specifically:

• The total realized net losses in the general accounts and subsidiary entities of survey participants were 0.01% as of Q4 2015, which was a slight drop from a year earlier, when losses were measured at 0.04%.

• Delinquencies recorded by survey participants within their general account holdings and subsidiary entities averaged 0.18% during the second half of 2015, up 0.02% from year-end 2014. Most of the delinquencies reported as of Q4 2015 fell into the 90+ days delinquent category.

• Problem loans were 0.17% in Q4 2015, which was a 14 basis point increase when compared to the second-half of 2014 of 0.03%. Based on the data collected, a few small and large firms reported higher delinquencies when compared to previous years and it was mainly concentrated in the small loan segment.

• For the realized losses reported in this survey, 37.82% were generated from foreclosures, 29.90% from write-downs and other, 11.78% from discounted payoffs and 16% from non-distressed sales. Distressed note sales and restructured loans accounted for the remaining 4.49% of total realized losses. Realized losses arising from foreclosures and non-distressed sale increased significantly by 24% and 16%, respectively, while realized losses from the write-downs and other, discounted pay-off and restructured loan categories decreased by approximately 18%, 10% and 13%, respectively, when compared to year-earlier levels.

• As of Q4 2015 the average LTV ratio held within the participating company portfolios remained relatively stable at 55.6% when compared to year-end 2014. Only 0.5% of loan exposure for all companies had a LTV ratio greater than 100%. The average DSCR (NOI) for the portfolios was 2.15x, which is a 13 bps increase over the year-earlier level. 96.9% of all exposure held was above a 1.0x DSCR. The LTV's are now below where they were during the last peak in market values in 2006-2007.