Medical Mutual Insurance of Ohio – Investing in Real Estate?
Medical Mutual Insurance of Ohio has found a way to invest your premium dollars and improve the economy, as well. Many commercial enterprises these days are having trouble finding financing. The insurance industry has figured out a way to help them and make money at the same time.
Wall Street bankers have usually had the commercial market cornered, making the lion’s share of all commercial loans. They still have roughly 1/3 of all commercial loans, even today. But, they took too many risks, and due to a 10 year period of corporate voyeurism, have crashed to a halt.
The mistakes the Wall Street banker made were, in part, the sale of bonds on of pools of mortgages. By selling bonds, they made more money on the mortgages, and were able to move mortgages off of their books. Then, they were able to make even more loans. The momentum caused them to spend less time screening potential clients, which resulted in poorly advised loans. After all, they could sell the mortgages off, right? However, the resulting crash in real estate affected all of the banks.
One of the results has been that banks are now reluctant to make any kind of real estate loan, even to reputable clients. Wall Street bank investments, in fact, grew by only .1% during the second quarter of 2011.
Insurance companies saw the possibilities in the real estate market. Medical Mutual Insurance of Ohio, and other insurance companies, keeps all loans on their own books. This gives them a realistic picture of the money they have out. The clients are closely screened and only companies with a proven track record. Insurance real estate loans are much more selective, and the results are a 1.5% growth in real estate loans in the second quarter of 2011.
Further influencing the market is the failure of Standard and Poor, earlier this year, to issue ratings on commercial mortgage bonds. The result was that investors would no longer purchase mortgage bonds, leaving the banks in a bind. The projected commercial mortgage market shrank from $50 to $35 billion.
Medical Mutual Insurance of Ohio, and other insurance entities countered by increasing the mortgage allotments for their investment portfolios. The result is increased mortgage investment, with over 99% of all commercial loans held by insurance companies reported to be in good standing.
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