Report

Insurance Companies and the Growth of Corporate Loans' Securitization

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.

JEL Classification: G11; G20; G22;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2021-08-01

Number: 975

Note: Revised June 2026.