AIG mortgage lending climbs to $5.2bn
NEW YORK (Bloomberg) — American International Group, the largest commercial insurer in the US and Canada, has been increasing lending for apartments as the company seeks to counter low yields on publicly traded bonds and volatility from hedge fund holdings.
The loan exposure for multifamily properties climbed to $5.2 billion as of September 30, up 20 per cent from $4.35 billion on June 30, according to a regulatory filing. The company said it is well positioned for mortgages because it can hold funds for years or decades to back insurance policies and doesn't need to worry about having to exit positions in a hurry.
“We are doing more direct lending, using our ability to take less-liquid assets, where we have done our own underwriting as opposed to buying securitised assets that have been underwritten by someone else,” chief executive officer Peter Hancock said in a Bloomberg Television interview. The strategy involves “taking greater control over our destiny by doing our own homework on the risk”.
AIG has been making more loans under chief investment officer Doug Dachille, who joined last year and has been scaling back from hedge funds, partly because of strict capital requirements on those holdings. The company has an investment portfolio of about $350 billion, mostly in bonds, and Dachille said in August that the property market is attractive because the ability to raise rents offers some protection against inflation.