NEAM Insights

Executive Summary In 2025, the U.S. life insurance industry’s net investment income continued to rise, though at a slower pace, extending the upward trend since 2023. Supported by elevated interest rates, book yield increased to 4.85%, its highest level in a decade, from a recent low of 3.78% in 2021. Read More

Private credit’s rapid expansion has prompted echoes of the subprime lending boom, raising the question of whether another financial stress event could follow. While the comparison is useful given the similarities in borrower weakness, leverage, and limited transparency, it should not be overstated. Private credit appears vulnerable to credit losses and repricing, but lacks the degree of interconnectedness, short-term funding dependence, and transmission into the banking system that made subprime mortgages systemically destructive. In the end, private credit is a market that may prove painful for some investors and borrowers, but it is less likely to trigger a broad financial shock. Read More

In today’s market environment, alternatives and private credit dominate the conversation. These products are marketed as innovative, differentiated, and attractive, while core fixed income is often dismissed as boring, commoditized, or merely a portfolio requirement. For some market participants, core bonds have become an afterthought, something to hold because investment policy requires it. That framing is misguided. Core fixed income does not have to be plain vanilla. When managed actively, thoughtfully, and with discipline, core fixed income can be a durable source of compounded alpha and true value creation over time. Read More

Executive Summary To understand how life insurers have navigated the recent period of elevated interest rates, we updated our analysis of the industry’s net investment spread (NIS)1 - the difference between the earned rate on invested assets and the estimated guaranteed rate credited to insurance contracts.2 Read More

Introduction Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are the cornerstones of the U.S. housing finance system. As Government-Sponsored Enterprises (GSEs), their primary function is to ensure liquidity, stability, and affordability in the secondary mortgage market by purchasing mortgages from lenders, pooling them, and issuing mortgage-backed securities (MBS) with a repayment guarantee. This process frees up lenders’ capital and enables them to extend more loans to homebuyers, contributing significantly to housing affordability and availability. Together, the GSEs guarantee $6.67 trillion of Single-Family mortgages, equivalent to ~52% of outstanding U.S. mortgage debt.1,2,3 Read More

Government Debt in the 21st Century One of the defining issues of our time is the debt sustainability of sovereign nations. For much of this century, governments around the developed world have lacked the political will or leadership to pursue fiscal austerity measures that would address large fiscal deficits and would put sovereign debt levels on a sustainable path. Politicians have made the determination that it is better to defer addressing the issue, get elected or re-elected, and leave the difficult decisions that may involve sacrifice for a later date or for someone else. The result of this procrastination approach has been ever rising levels of debt on both an absolute basis and relative to the size of the economy. Read More

Executive Summary In this issue, we examine the enterprise profile and investment characteristics of U.S. fraternal insurers, drawing comparisons with the broader U.S. life insurance industry. Despite being generally smaller in size, fraternal insurers have recorded comparable investment income (expressed as a percentage of invested assets) with the broader industry over the past four years. However, the fraternal composite’s fixed income portfolio book yield has been lower compared to the life industry, and the gap between the two groups has widened since interest rates began to rise in 2022. While the fraternal composite’s fixed income credit quality was in line with the rest of the life industry, duration and sector allocation differences may have been contributing drivers to the lag in book yields. Read More

Datacenter Asset Backed Securities (“ABS”) emerged in 2018 as a niche asset class with limited activity and investor participation. Fast forward to today and the market has grown to over $15 billion in debt outstanding1 and a liquid secondary market. We think the sector offers fixed income investors diversification, strong underlying fundamentals, and attractive risk-adjusted relative value. Read More

The Agency Mortgaged Backed Securities (MBS) market has been on a roller coaster between periods of excess demand and excess supply over the last two decades. This has been largely driven by the Fed’s quantitative easing programs, along with an ever-changing composition of the demand base. Prior to the GFC (Great Financial Crisis), Government Sponsored Entities (GSEs) could be counted on to support MBS, but that mandate no longer exists. Today, the upshot of the complex mix of supply side and demand side factors has left MBS in a more challenged technical position resulting in attractive spread levels for the high quality, highly liquid, fixed income stalwart. Yields on MBS now present an attractive entry point for insurance companies, with the opportunity to lock in intermediate-term yields at attractive risk-adjusted spreads. Read More

A lot has been written about the potential future impact of Artificial Intelligence (AI) on both the U.S. as well as the global economy. It is early innings in this game but we are already seeing explosive growth in tools for AI applications in businesses around the world. What better way to examine this than to take a look at one example of the potential use of AI in our business. Read More