Threat of CLO downgrades poses challenge for insurers

Insurance
By Paola Aurisicchio
27 May 2020

The possibility of CLO downgrades from the major rating agencies is creating a difficult situation for insurance companies, many of which have bulked up their investments in lower rated bonds in the last two years.

US insurance companies have been a growing cohort of the CLO buyer base in recent years, increasing their investments to from $122bn in 2018 to $160bn in 2019. 

In 2018, insurance company CLO holdings were concentrated in higher rated tranches, with about 80% rated single-A or higher. Last ...

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