P/C Insurers Invest $320 Billion in Public Projects Including Schools

June 20, 2007

The insurance industry holds investments in municipal bonds worth more than $320 billion, investments that help fund construction of schools, roads, and hospitals, and support a variety of other public sector activities, according to a new industry study.

The report issued by the Insurance Research Council (IRC) found that nearly one-fourth of al of those investments by property/casualty insurers at the end of 2005 funded education-related activities and projects.

The report, “Municipal Bond Holdings of Property-Casualty Insurance Companies,” analyzes the types of public projects funded through municipal bonds purchased by insurers.

The report reveals that municipal bonds for projects involving public utilities made up 15 percent of the total combined value of all municipal bonds held by property-casualty insurers. Transportation-related bonds accounted for 12 percent of insurers’ municipal bond investments.

Insurance companies invest the premiums paid by policyholders to ensure that the money to pay claims is available when the need arises. Municipal bonds make up a large portion of the investment
portfolios of many property/casualty insurers.

“Property-casualty insurers’ impact on the economy goes beyond insurance,” explained Elizabeth A. Sprinkel, senior vice president of the IRC. “Insurers also provide a major source of capital for the public
sector.”

The findings of the IRC report, Municipal Bond Holdings of Property-Casualty Insurance Companies, are based on data compiled by A.M. Best Co. IRC analyzed municipal bond data to determine the bonds’
purpose and the state in which they were issued. Bonds held by insurers as of December 31, 2005, were analyzed.

Source: Insurance Resource Council
www.ircweb.org

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