2014

Life Company Mortgage Returns Up in First Quarter 2013

BOSTON, July 15, 2013 /PRNewswire/ -- Commercial mortgage loans held by life insurance companies generated a total return of 1.99 percent in first quarter 2013, an improvement over the 1.85 percent return achieved in fourth quarter 2012, according to the LifeComps Commercial Mortgage Loan Index.

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Income contributed 1.29 percent and price contributed 0.70 percent in first quarter. Pricing benefitted from a decline in mortgage spreads, which more than compensated for a small upward shift in the Treasury yield curve.  Yields on the 10-year Treasury increased 9 basis points over the quarter to 1.87 percent.

For the 12-month period, total return was 7.94 percent with income contributing 5.55 percent and price adding 2.39  percent.   Price gains were primarily driven by tighter credit spreads however Treasury yield movement also made a small positive contribution.  The 10-year Treasury ended the period 36 basis points lower.

Of the four major property types, retail performed best over 12 months with a total return of 8.25 percent followed by apartments at 8.13 percent, office at 7.84 percent and industrial at 7.30 percent.

Commercial Mortgage Loan – Total Return by Property Type as of March 31, 2013

Property

Quarter

12 months

Apartments

1.76%

8.13%

Office

2.14%

7.84%

Retail

1.98%

8.25%

Industrial

2.10%

7.30%

All*

1.99%

7.94%

*Includes hotel, mixed use, and other commercial

About LifeComps
The LifeComps Commercial Mortgage Loan Index is the only published benchmark for the private commercial mortgage market based on actual mortgage loan cash flow and performance data, which has been collected quarterly from participating life insurance companies since 1996. Active loans in the LifeComps Index number approximately 5,000 with an aggregate principal balance of $93 billion and market value of $102 billion. The weighted average duration is 4.6 years and average reported loan-to-value is 54 percent.

Since its inception, the LifeComps database has tracked individual cash flows on more than 21,000 loans with principal balances totaling in excess of $280 billion. More than 6,500 loans totaling $100 billion have been tracked from origination to disposition. 

Participating life insurers include Allstate Life Insurance Company, CIGNA Investment Management, AXA Equitable, John Hancock, Northwestern Mutual, Principal Financial,  Prudential Insurance Company of America, and TIAA.  For more information, visit www.lifecomps.com.

SOURCE Northwestern Mutual



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