@Wellington Management.
Federal Home Loan Banks (FHLB) lend to insurers at very competitive rates, providing opportunities to add alpha or enhance yield by borrowing at low cost and investing in risk-appropriate markets. Adding to its appeal, FHLB debt may receive favourable treatment as operating leverage by ratings agencies. We provide examples of customised investment solutions that can enable insurers to capitalise on the advantages of FHLB borrowings, and we also note potential risks.
