US-based insurance companies account for a large percentage of institutional investors allocating capital to private real estate funds. As of September 2012, the average allocation to real estate of these insurance companies was 2.1% of total assets, equating to $961mn.
Three percent of US-based insurance companies that are currently investing in real estate have less than $1bn in total assets under management, 13% have $1-4.9bn, and 10% have $5-9.9bn in total assets. Thirty-five percent of these investors have $10-49.99bn in total assets, 6% have $50-99.9bn and 33% have $100bn or more in total assets. An example of a large US-based insurance company that commits to private real estate funds is Prudential Financial. This firm has $619bn in total assets and $500mn invested in private real estate funds.
In terms of overall allocations to real estate, 14% have $100-$249mn invested in the asset class, 17% have between $250-499mn invested, and 14% have real estate portfolios worth $500-999mn. Seventeen percent of these investors have $1-4.9bn allocated to property and 6% have over $5bn in the real estate asset class.
US-based insurance companies have a strong preference for opportunistic vehicles, with 81% stating a preference for this strategy, and 70% exhibiting an interest in value added funds. Fifty-five percent of insurance companies also give strong consideration to debt strategies. Forty-five percent of US-based insurance companies favour distressed funds compared to 32% expressing an interest in core vehicles. Core-plus funds and funds of funds are less favoured by insurance companies.