Investments in Infrastructure: Win-Win-Win

Oct 24, 2019

Life insurers are best known for helping families build a financial safety net that protects them through all stages of life. Helping people take care of the things that matter most is the most critical mission for members of the American Council of Life Insurers (ACLI).

But ACLI members also make key contributions to society beyond our iconic financial security products.

Life insurers play a major role in capital formation and liquidity in the financial marketplace. We are one of the nation’s largest sources of investment capital, with $6.5 trillion invested in the U.S. economy.

Much of that is invested in long-term corporate bonds that support American companies and the construction of new schools, roadways, and transportation projects.

Our business is well-suited for these types of investments. Life insurers make financial commitments to our customers that could stretch for several decades. So, we seek out high quality, long-term investments, including bonds, that fund infrastructure projects.

Bonds purchased by life insurers have an average maturity of 18.1 years at the time of purchase, serving as America’s leading industry source of long-term “patient capital”.

We’ve been part of American life for generations, providing long-term investment capital necessary for infrastructure and economic growth. For example, life insurers were major investors in the federal “Build America Bonds” program initiated after the 2008 financial crisis to stimulate infrastructure development.

Looking forward, we would seriously consider investing in properly structured federal, state, municipal or private programs that help rebuild the nation’s infrastructure and fuel job creation.

To put it simply, these investments are a win-win-win:

  • Our nation wins by accessing valuable capital that further stimulates economic growth.
  • The insurance industry wins by matching its liabilities with long-term assets.
  • We all win by living better lives with safer roads, trustworthy bridges, modern hospitals, and other infrastructure enhancements.

Last month we shared our views about infrastructure investments with the National Association of Insurance Commissioners and the Center for Insurance Policy and Research. They are researching the role of U.S. insurers as a source of infrastructure financing. We look forward to further interaction with these groups on their endeavor.

Carl Wilkerson

Carl B. Wilkerson was Vice President and Chief Counsel, Securities at the American Council of Life Insurers until March 2020. He principally addressed financial service institution regulation that had an impact on life insurance companies. Prior to joining ACLI in 1981, he was a staff attorney at the Securities and Exchange Commission.