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Making the Case for Collateralized Loan Obligations for US Insurers
Collateralized loan obligations (CLOs) are opportunity-rich debt instruments that offer the potential for above-average returns versus other fixed income strategies. We explore how CLOs work and the potential benefits they offer insurance investors.
What is a CLO?
Put simply, a collateralized loan obligation is a portfolio of leveraged loans that is securitized and actively managed as a fund. Each CLO is structured as a series of tranches that are interest-paying bonds, along with a small portion of equity.
A wealth of potential benefits for insurers
Regulatory Capital Efficiency
Higher Returns
Regulatory Capital Efficiency
Low interest-rate sensitivity
Attractive risk profile
Lower default rates
Diversification
Inflation hedge
Strong credit quality
Spreads Are Compelling Versus Other Debt Sectors
Source: JP Morgan, Bloomberg Barclays as of 27 January 2021. For illustrative purposes only. We are not soliciting or recommending any action based on this material. Any views represent the opinion of PineBridge Investments LLC, are valid as of the date indicated, and are subject to change.
PineBridge Has a Long History in Specialized Fixed Income
Our team of professionals includes senior leadership that has been in place for nearly 20 years, as well as credit analysts, most of whom have been with us for at least 10 years.*
We are differentiated by an experienced team that has been serving the insurance industry across a variety of niche fixed income asset classes.
In fixed income, our multi-billion-dollar portfolio is invested across the spectrum of developed and emerging markets, investment grade debt, leveraged finance, and multi-sector strategies.
* As of 31 December 2020.
For more on how insurers can put CLOs to work, read our white paper.
Download White PaperThis information is for educational purposes only and is not intended to serve as investment advice. This is not an offer to sell or solicitation of an offer to purchase any investment product or security. Any opinions provided should not be relied upon for investment decisions. Any opinions, projections, forecasts and forward-looking statements are speculative in nature; valid only as of the date hereof and are subject to change. PineBridge Investments is not soliciting or recommending any action based on this information.