Financing programs from the Federal Home Loan Bank (FHLB) system have been used by many larger U.S. insurance companies and Conning thinks they could be helpful tools for small and medium-sized insurers as well.
Rising funding costs, stressed credit markets and distressed investors are creating new challenges for insurers accustomed to low interest rates. Conning suggests they consider options to strengthen their balance sheets, including membership with an FHLB.
The Viewpoint “FHLB for Insurers: A Source of Liquidity During Market Dislocations” offers a comparison of FHLB financing programs to other market funding sources. Conning’s experience can help clients assess the benefits and potential risks to their investment strategy and balance sheet when implementing an FHLB program.