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Positive returns for life insurance company mortgages

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After two consecutive quarters of negative returns, private commercial mortgages held by life insurance companies nationwide rebounded into positive territory during first-quarter 2009. According to the LifeComps Commercial Mortgage Index, which is based on cash flow data collected from participating life insurance companies, first-quarter 2009 finally saw a positive return of 1.63 percent following negative returns in the last two quarters of 2008. But it is unclear whether these positive numbers will hold. A Standard & Poor’s report in May showed that owners are likely to cut all other expenses before defaulting on their mortgages, so as the recession continues, there is a higher possibility for distress or defaults in the private commercial mortgage markets.

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Mortgages