Insurance companies are significant investors in real estate, and as of September 2010, the average real estate allocation of these institutions is approximately $1.9 billion. The average target allocation to real estate is approximately $2.4 billion.
39% of insurance companies that invest in real estate have total assets of less than $10 billion. 35% have assets of between $10 billion and $49.9 billion. 10% have $50-99.9 billion in assets under management, while 13% of insurance companies have assets of between $100 billion and $399.9 billion. Only 3% have over $400 billion under management.
In terms of overall allocations to real estate, 34% have less than $500 million invested in property. 18% have $500-999 million, and 29% have real estate portfolios worth between $1 billion and $3.99 billion. 6% have over $10 billion in the real estate asset class.
Of the insurance companies that invest in private real estate funds, 80% have a preference for Europe-focused vehicles. This is no surprise considering that 62% of insurance companies that invest in real estate in general are based in Europe. R+V Lebensversicherung is one European insurance company which was active in private real estate in H1 2010. The €60 billion German insurer plans to invest between €200 million and €300 million in unlisted funds in the next 12 months. Half of the insurance companies that commit to unlisted property funds target North America-focused funds and 48% are interested in funds investing in Asia and Rest of World. NLI International is a Japan-based insurer that commits to private equity real estate funds and it is advised in-house.
With regards to the fund strategies that insurance companies are attracted to, value added and opportunistic funds are the most prevalent, with 68% having a preference for opportunistic funds and 72% having an interest in value added vehicles. 56% and 40% of insurance companies favour low-risk core and core-plus strategies respectively. Debt and distressed strategies are appealing to 28% and 21% of insurance companies that invest in private funds.
Preqin’s Real Estate Online currently includes profiles for 146 insurance companies with an active interest in real estate.