Financing a Golden Future

Aug 24, 2021

A lot of news out of the nation’s capital these days relates to infrastructure.

At least one industry has already pumped billions of dollars into infrastructure, including $10.8 billion in California alone – the life insurance industry.

Governmental and public-private authorities routinely issue bonds to upgrade and modernize California. They have found life insurers eager for these investment opportunities.

Life insurers’ interest in these bonds is easy to understand. They finance necessary projects. They offer solid returns and are issued by reliable entities.

Another reason is these long-term investments align with life insurers’ long-term obligations to fulfill guarantees to life insurance policyholders, and owners of annuities and other industry products. Every day life insurers pay out $153 million to Californians.

Large infrastructure investments by life insurers include $314 million in bonds issued by the San Diego County Water Authority, $324 million in Sacramento Municipal Utility District bonds, $618 million in the Alameda Corridor Transportation Authority; $836 million in the San Francisco Public Utilities Commission, $1.1 billion in the Los Angeles Department of Water & Power and $1.8 billion in the Bay Area Toll Authority.

Another $1.1 billion has been invested in airports and $100 million in ports.

But life insurers’ long-term investments expand beyond infrastructure, including:

  • Healthcare: $1 billion in bonds issued by hospitals and public health agencies.
  • Agriculture: Nearly $6 billion in mortgages to California farmers.
  • Education: $9 billion in bonds issued by school districts, community colleges and higher education institutions.
  • Retail: $21 billion in 3,487 mortgages throughout the state.
  • Apartments/Multifamily: $23 billion in 1,580 mortgage loans.
  • Office Space: $29 billion in loans on 2,256 properties.

Combined with stocks and bonds issued by state-based companies and other investments, life insurers have pumped a total of $905 billion into California’s economy.

Money life insurers invest comes largely from policyholder premiums.

Put simply, policyholders not only financially protect their families, they help finance infrastructure and a wide range of initiatives benefitting towns, cities and California overall. 

With infrastructure, education, health care and other needs increasing, life insurers will play an even bigger role in financing a new golden future for California.

(John Shirikian is President and CEO of the Association of California Life & Health Insurance Companies.)

John Shirikian

John Shirikian is President & CEO of the Association of California Life & Health Insurance Companies.