Insurance company investment in agriculture
MetLife, Inc. announced that it originated, through its agricultural investments department, $3.0 billion in agricultural loans in 2012, an increase of more than 7 percent over 2011. With an agricultural mortgage loan portfolio of approximately $13 billion at the end of 2012, MetLife contends it remains a top lender to agriculture.
Agricultural mortgages provide MetLife with investment opportunities that match the long-term liabilities the company writes through its insurance products, explained Robert Merck, global head of agricultural investments for MetLife.
“Life insurers face the challenge of investing customer payments to ensure they will have sufficient funds available to satisfy claims and withdrawals in the distant future. This generally leads life insurers to invest in a collection of long-term assets,” noted a Chicago Fed Insurance Initiative analysis issued this week.
That Chicago Fed report showed that the life insurance industry had mortgage loan assets of $323.1 billion and real estate of $20.6 billion in 2011. There was no breakout of agriculture. There was a note that U.S.-based insurance companies had 17.2 percent of their bond holdings in foreign countries.
In 2011, MetLife originated $2.8 billion in agricultural loans. This is consistent with the company’s global strategy to grow its business in emerging markets, the company noted.
MetLife expanded its agricultural lending platform in Brazil, Latin America’s largest economy, offering five- and 10-year agricultural mortgages in U.S. dollars. In 2012, MetLife originated $300 million in agricultural loans to Brazilian producers of cotton, grains and oilseeds, among other crops.
“We bring the same commitment to prudent risk management and a long-term approach to our international opportunities as we do to our domestic ones, and we have succeeded in growing both in 2012,” said Dan O’Neill, managing director and head of MetLife’s agricultural portfolio unit. “We will continue in 2013 to identify superior agricultural lending opportunities in the U.S. and internationally, with a particular focus on emerging markets.”
Through its agricultural investments department, MetLife oversees an agricultural portfolio of approximately $13 billion, which consists of farm and ranch, food and agribusiness and timberland mortgages. Highlights of MetLife’s domestic and international invested companies in 2012 included:
GF Group, first mortgage secured by agricultural real estate located in the states of Bahia and Piauí, Brazil. GF Group is one of the largest Brazilian agricultural commodity producers in Northeast Brazil. The largest portion of their cropland is dedicated to soybeans, with the remaining portions planted in cotton and corn.
Forestar Group Inc. senior secured loan secured by timberland in Georgia, Alabama, Texas and other company assets. Forestar Group Inc is a publicly traded real estate and natural resources company headquartered in Austin, Texas.
NORPAC Foods, Inc. first mortgage secured by processing and cold storage facilities in Oregon and Washington. NORPAC Foods, Inc. is a processor and marketer of high quality branded and private-label canned and frozen food products.
American Cold Storage-North America, L.P. first mortgage was secured by warehouse/distribution facilities located in Indiana, Kentucky and Tennessee. American Cold Storage operates public refrigerated storage warehouses and offers services in the areas of handling, storage and processing/freezing.
“We think 2013 will offer substantial opportunities for agricultural mortgage lending. Our 96-year track record of investing in the agricultural sector and our commitment to superior customer service will help drive our success this year and beyond,” said Merck.
MetLife has provided agricultural financing since 1917 and is a global provider of insurance, annuities and employee benefit programs, serving 90 million customers. Through its subsidiaries and affiliates, MetLife holds market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East.
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