Newsletter

Privately Placed Debt on Life Insurers’ Balance Sheets: Part 1—A Primer

Abstract: Life insurers buy long-term assets to match their long-term liabilities and hence are among the largest investors in corporate bonds.1 Over the past decade, insurance companies have shifted their corporate bond investments toward privately placed bonds (private placements). A private placement is an unregistered security that is sold to a limited pool of investors, primarily institutional investors, such as investment banks, pension funds, and insurers. While privately placed bonds accounted for 13% of life insurers’ bond investments in 2004, they accounted for over 20% in 2022 (figure 1).

Keywords: Financial Economics;

JEL Classification: G11; G22; G32;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Chicago Fed Letter

Publication Date: 2024-05

Volume: 493

Pages: 9