Why Life Insurers Are More Active Yet Selective Lenders
They’ve got ambitious goals this cycle, but not just any deal will cut it.
Amid all the uncertainty that commercial real estate is facing, there’s one group of lenders that appears particularly well positioned to not only succeed but also prosper: life insurance companies. Their mix of flexibility, strong balance sheets and surety of execution for borrowers make them a popular option in today’s dislocated debt markets.
This group remains a mainstay of the lending landscape, holding more than $770 billion in CRE debt going into 2026, according to the Mortgage Bankers Association. That’s 16 percent of all outstanding debt, representing the third-highest share after banks and agencies.
They’re not slowing down, either. Throughout 2025, life companies increased their holdings by more than $47 billion, beating out banks and agencies in the second quarter, the same source reported.
Company lenders and agents who spoke about 2026 and beyond reported not only significant increases in their production goals but also a rise in their overall enthusiasm for CRE lending. Some have even taken business from more risk-tolerant banks, debt funds and CMBS lenders.
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At the same time, however, life companies have also become more selective. It’s a dichotomy that makes life insurance lending and deal structures some of the most stable, yet competitive in the financing world, even amid a gradual reentry of banks and private capital into the space.
The production paradox
The strategies of the largest life company lenders can be summed up in four words: ambitious yet risk averse.
“There’s more of an appetite (for life companies) to put money out and look at a wider variety of opportunities, but there’s also a higher level of discrimination for both the types of deals they want to lend to and sponsors they want to do business with,” said Faron Thompson, senior vice president & regional managing director at Northmarq who sources capital for CRE deals in the Southeast.
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For a given property to pencil out for most life companies, it often needs to thread the needle between strong cash flows with low capital intensity alongside an ease of refinancing.
For some lenders, this is more of an abstract idea than a preference for a particular asset class. “We have a broad appetite for all kinds of properties but, in the end, it’s about having an income that you can underwrite,” pointed out Robert Boyd, a managing director with New York Life Real Estate Investors.
New York Life’s lending strategy focuses less on property or even deal types. The company offers a diverse array of financing products, and there are usually one or two that fit the borrower’s needs. An investor could secure both floating- and fixed-rate debt in addition to construction and bridge financing, often on a shorter-term basis than the traditional 10- to 25-year life company lending terms.
Historically, these terms have almost exclusively been the territory of banks, but those also come with higher interest rates and collateral requirements. “We have evolved to be a much more creative and aggressive lender than what might stereotypically come to mind from a life insurance company,” Boyd commented.
Still, those lenders who have modified their products to fit the market are also exercising restraint. “Most (lenders) have shorter-term floating-rate money than they’ve had historically, but they aren’t going to compete to do anything crazy,” noted Dan Rosenberg, an executive vice president at BWE. “They’d rather compete on pricing. Others share this degree of enthusiasm but are a bit more sector specific. The proof is in the production goals. Voya Investment Management, the capital markets arm of Voya Financial, has an origination goal of $4 billion for 2026—up by $1 billion from 2025. The company increasingly favors industrial, retail and self storage deals, all while shying away from office as well as more niche asset classes such as student housing.
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For Greg Michaud, Voya’s head of real estate finance, these preferences are governed by the firm’s ability to reliably refinance a particular asset. “It’s been our thesis (that) because office is very capital intensive, and industrial is not,” Michaud pointed out, “when you hit a downturn, office struggles mightily because you have to re-lease it, and it’s often very expensive to do so. Industrial, on the other hand, doesn’t require a lot of capex to re-lease.”
Conversely, student housing is an area that Michaud referred to as “untested.” “You have to be careful, because they haven’t yet been through a cycle like office.”
This refinancing test leads the firm to focus its underwriting on a property-specific basis rather than on a given region’s performance. “Our model doesn’t say, ‘don’t do anything in the Inland Empire because it’s overbought,’” Michaud detailed. “We think there are good deals in bad markets and bad deals in good markets.”
Shifting sentiments
An aversion to risk doesn’t necessarily mean a life company will avoid a particular loan prospect, but it may change how it structures deals, especially since longer-term, nonrecourse lending has more acute refinancing and liquidity limitations than bank or CMBS lending. “They like the value they get from lending to commercial real estate, but it all just depends on the lender,” observed Patrick Barkley, a principal at Gantry.
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Manulife, one of the nation’s largest lenders, can speak to this directly. “Before the pandemic, we often funded larger loans on our own,” said Richard Baillie, vice president & senior managing director of the real estate finance group at Manulife. “To help manage refinancing and liquidity risk, we more regularly partner with other lenders in club and syndicated financings.”
In addition to properties and asset classes, life companies have also come to scrutinize their borrowers more. “We can offer attractive pricing to borrowers willing to contribute modestly more equity, but durable cash flow is always going to be a key factor, alongside a sponsor’s track record, financial strength and reputation,” Baillie said.
With this in mind, some lenders have also come to assume a degree of macroeconomic uncertainty when originating a new loan, particularly in light of the disruptions brought on by the Iran war.
As such, lenders are putting more emphasis on rent growth in their underwriting while cutting back when comparing borrowers’ projections with their own models.
“(Things such as) $110 barrels of oil for an extended period or a lack of rate cuts don’t drive the day-to-day underwriting,” Michaud noted, “but if we’re looking at a property for a transitional deal, we may put more emphasis on rent growth or a lack thereof. We always cut back what the borrower thinks their rent increases are going to be, but we may back off even further if we think there is some volatility coming to the market. “The past several years have reinforced the value of partnering with sponsors who can navigate market disruption,” Baillie emphasized.
Getting ahead, staying ahead
Despite stricter underwriting as well as lower flexibility and leverage than banks, agencies or CMBS lenders, the certainty of execution associated with life company lending is proving desirable.
“You know what you’re getting (because) you’re locking in a rate allocation, and as long as there are no surprises during the process, you know what you’re going to get in the end,” Barkley pointed out. “A lot of (borrowers) we worked with may have worked more with CMBS lenders in their early days, but now they’re in a position where they want that certainty of execution.”
Some lenders are actually losing business to each other, rather than alternative capital sources.
For David Politano, managing director & head of debt strategies at MetLife Investment Management’s real estate group, this ultimately comes down to capital costs. “These are lenders that look at risk the same way we do, and it ultimately comes down to pricing and leverage,” Politano said. “Some lenders are more comfortable going up higher in leverage than we will be and, given that many lenders are (that) active turns it into a borrower’s market.” In this financing environment, the messaging is often equally important as the lending terms. “The securitization shops in the market will sometimes be more volatile than we will be, and people see the stability as valuable in times of trouble,” Boyd reasoned.
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