Insurers Clamor for Securitized Debt as Annuity Sales Surge
- Securitized products make up 25% of insurers’ bond portfolios
- Morgan Stanley says insurers could buy even more ABS, CLOs
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Insurance companies are snapping up asset-backed bonds to fund future payouts on their annuity products which are seeing record demand — a trend that is expected to continue, according to Morgan Stanley.
Securitized products grew to 25% of insurers’ bond portfolios in 2023 compared to 22% in 2017, adding roughly $365 billion in exposure to the segment, the bank said in a January 31 research note. Insurers putting together annuity products are drawn to longer-dated asset-backeds as their duration is a good match for annuities, and also for their attractive yield profiles.