The wave of bushfires now roaring over much of Australia has raised a sensitive question: are the fires relevant enough to those interested in the U.S. life insurance and annuities markets that these can people justify having read about fires at work?

(Related: Debt funds overtake life insurers in commercial mortgages)

The answer seems to be that the bushfires in Australia will have little effect on the real estate, mortgage or mortgage-backed securities portfolios of U.S. life insurers, but concerns about the fires could affect how insurers -life Americans see their investments in real estate. related assets in the United States.

Basics in Australia

Australia has 26 million people living in an area of ​​3 million square miles.

Fires started there months ago. The fires currently garnering the most attention in Australia, occurring in the Australian states of Victoria and New South Wales, affect an estimated 14 million people.

The number of people affected by the fires in Australia is similar to the size of Pennsylvania’s population.

Two years ago, when a wave of wildfires ravaged California, those fires affected an estimated 11 million people.

Australia has residential real estate with a total value of approximately $ 5,000 billion, in US currency, and commercial real estate with a total value of approximately $ 600 billion.

The Australian Insurance Council of Australia received reports of around $ 200 million in property insurance claims linked to the bushfires as of December 20, but the fires appear to have spread and are approaching the boundaries of major cities , like Melbourne and Sydney since then.

Today, for example, Twitter is full of notices from Australian fire safety authorities. Authorities tell many people that their communities are surrounded by fire and that there is no way for people living in those communities to evacuate. These people are advised to try to find shelter on the beach or in a lake. People on Twitter are posting numerous hearings of firefighters who ran out of water and had to give up trying to save homes.

Investments of US life insurers

U.S. life insurers ended 2018 with about $ 4.2 trillion in assets, $ 523 billion in mortgage investments and about $ 20 billion in real estate investments, according to the Capital Markets Bureau. capital of the National Association of Insurance Commissioners.

U.S. life insurers ended 2015 with just about $ 16 billion in exposure to mortgages and real estate investments outside of the United States. Investments in Australian mortgages and real estate accounted for less than 5% of the $ 16 billion, or less than $ 800 million, according to the NAIC.


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