While commercial real estate (CRE) has been an investment staple for larger insurers over the years, it has been much less prominent in the portfolios of small and mid-size insurers. In the Viewpoint “The Value of Commercial Real Estate in Insurers’ Portfolios,” author Matt Reilly from Conning’s Insurance Solutions team outlines the unique features of CRE and explains why insurers should consider an allocation to the asset class.
CRE can offer an inflation hedge as well as diversification, competitive risk-adjusted returns, and current income. In addition, Reilly notes, insurers may benefit from real estate’s tax and regulatory capital treatment.
Larger insurers often have in-house expertise to pursue CRE investments, but Reilly notes that Conning can offer valuable insights and expertise to resource-challenged firms that may help them take advantage of opportunities in CRE.