...Stable Asset Allocation: There have been no material changes in life insurance companies' asset allocation over the past several years. However, as interest rates remain at historically low levels, life insurers have made a modest allocation shift into less liquid asset classes, including alternative investments, private placement corporate bonds and commercial mortgage loans. Search for Yield: Purchases of high-yield, fixed-income assets appear to be limited. But for the companies Fitch Ratings surveyed, the following asset classes as a percentage of investments increased from 2011 to 2014: Schedule BA from 4.6% to 5.4%, mortgage loans from 11.0% to 11.7% and private placements from 15.1% to 15.6%. This limited change in asset allocation is riskier from a credit perspective, but the additional risk remains manageable. Fixed Income Dominates: At year-end 2014, bonds represented 72% of life insurance companies' general account invested assets, down slightly from the prior year end. High-Quality...
