Insurance Companies and the Growth of Corporate Loans' Securitization

Fulvia Fringuellotti and Joao Santos

No 975, Staff Reports from Federal Reserve Bank of New York

Abstract: CLOs have emerged as the fastest growing asset class in insurance companies' portfolios after the Global Financial Crisis. This was induced by insurers' capital regulation which treats CLO tranches the same as equally-rated corporate bonds, despite the former offering higher yields. Consequently, insurance companies developed a preference for CLOs over corporate bonds, which was strengthened by a 2010 regulatory reform. Insurers' CLO investments shaped the CLO market, influencing deal structures and fueling its rapid post-crisis growth. This expanded credit access for corporate borrowers, especially riskier firms. It also led to a substantial transfer of credit risk from banks to insurers.

Keywords: insurance companies; CLOs; regulatory arbitrage; corporate loans; securitization (search for similar items in EconPapers)
JEL-codes: G11 G20 G22 (search for similar items in EconPapers)
Pages: 110
Date: 2021-08-01
New Economics Papers: this item is included in nep-cwa, nep-ias and nep-isf
Note: Revised June 2026.
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Citations: View citations in EconPapers (1)

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Working Paper: Insurance Companies and the Growth of Corporate Loan Securitization (2021)
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