Life insurance companies are the silver lining of the capital markets. Commercial mortgages held by life insurance companies posted a 1.22% positive return in the fourth quarter of 2020, according to new research from Trepp. While the return was a decrease from the third quarter, which had a positive return rate of 1.71%, it still signals healthy activity considering the economic dislocation caused by the pandemic.

It also is a sign that returns have stabilized for the second consecutive quarter. The returns were driven by both income, which contributed 1.01%, and appreciation, which contributed 0.21%. In addition to the record-low interest rate environment, lenders are cautiously optimistic about the market in 2021, according to the Trepp report.

While CMBS is suffering from elevated delinquency rates, life companies have seen a decrease in delinquency rates, which are already significantly lower than the CMBS market. From the third quarter to the fourth quarter, life company mortgage delinquency rates fell from 0.06% to 0.04%. Deferrals and forbearance has also decrease from the third quarter to the fourth quarter. In quarter four, interest capitalized fell to $24 million from $33 million in the third quarter.