Life insurance companies lend on real estate as one form of investment in their portfolio. Since the mid-20th century, life insurance companies have usually offered the lowest rate on commercial real estate loans. However, life companies are very particular with and usually only lend on properties that are in the top 10% of the most desirable properties in the largest cities.
Life companies are partial to financing A and B+ quality industrial warehouses, office, retail, and multi-family properties. Leverage is typically lower than CMBS loans; and is usually limited to loans that are 60% to 70% loan to value.
Life insurance companies were not active in the commercial lending markets during the economic downturn but they are slowly re-emerging as an important source of debt capital for commercial real estate since the second quarter of 2010.