COMMERCIAL REAL ESTATE LOANS - AN EXPLORATION ON DETERMINANTS OF INSURERS' INVESTMENT DECISIONS

Beate Monika Philipps

Abstract: In order to gain additional alpha in a perpetual low interest yield environment, some insurance companies have decided to invest in commercial real estate loans. Insurers' comprehensive motives for their investments in this asset class, however, are largely unexplored. This paper provides unique insights on insurers' investment determinants and their interrelations. It reflects inter alia that the commercial real estate markets and the insurers' regulatory regime may have a strong influence on investment decisions. In addition, this study establishes a framework for insurers' strategies for commercial real estate loan investments. Survey results and semi-structured expert interviews are the basis for the analysis. The respondents cover nearly 390 years of work experience in this specific segment. The exclusive panel of interviewees includes representatives of European insurance undertakings totaling more than €60 billion gross written premiums. This study contributes to the topical discipline of investment decisions of institutional investors. The results might be utilized by academia, insurers' internal or external investment managers, arrangers of syndicated loans, and debt fund providers.

Keywords: Institutional Investors, Investment Decisions, Benchmarking, Commercial Real Estate

DOI: 10.24874/IJQR17.02-10

Recieved: 25.10.2021  Accepted: 01.07.2022  UDC: 330.322.54

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