Insurance Companies: Take Steps to Manage Regulatory Risks in Entering the Retail Mortgage Lending Business

Insurance Companies: Take Steps to Manage Regulatory Risks in Entering the Retail Mortgage Lending Business


By: V. Gerard Comizio, Nathan S. Brownback

A new trend is emerging as insurance companies seek to become the new financial supermarkets.  While insurance companies have been long-time players in commercial lending, it is clear they are looking to diversify into new areas and innovate as much as possible, particularly into retail mortgage lending.  Motivated by, among other things, the possibility of higher returns, a lack of liquidity in the securitization market, low yields in traditional investments, such as U.S. Treasury and sovereign debt, and the levels of capital required for more aggressive investments, a quiet reshuffling of the lending industry is emerging as insurance companies begin to join the ranks of the nonbank lenders.

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