Investment Expertise Software & Services Insurance Research About Us Regions Sign In Municipal Bonds: Four Opportunities for Insurers December 01, 2021 By Michael R. Gibbons, Managing Director and Trader and Kevin Antaya, CFA, Director and Portfolio Manager The Tax Cuts and Jobs Act of 2017 (TCJA) changed the landscape of the municipal market in several ways, as the buying behavior of both P&C and life companies altered their allocations to the asset class. P&C companies shied away from increasing the amount of tax-exempt municipals they owned, in some cases reducing holdings. Life insurance companies used the increase in taxable supply to complement longer duration corporate allocations. In the past four plus years, relative value has diminished across investment-grade fixed-income sectors. However, Conning notes that segments of the broader $4 trillion municipal bond market offer insurers opportunities not only for diversification but to also to enhance portfolio yield and improve aggregate credit quality. The municipal market has a larger percentage of securities rated A- or better than the corporate market, and they often offer higher yields than corporate debt of similar quality and duration. Municipal securities, particularly taxable deals, will typically have a longer duration and a lower history of defaults than corporates (see Figure 1). Click below to continue reading Conning’s Viewpoint, “Municipal Bonds: Four Opportunities for Insurers." Download PDF Home Terms of Use Privacy Policies UCITS Fund Documents Business Continuity Plan Broker Check Corporate Responsibility Modern Slavery Statement UK Conning Holdings Ltd Tax Strategy Sitemap Investment Expertise Investment Capabilities Liability-Driven Investing Investment Accounting and Reporting ESG Investing Consultant Relations Software & Services Economic Scenario Generator Strategic Asset Allocation Economic Capital Modeling Conning Allocation Optimizer Climate Risk Analysis Insurance Research Conning Library Publications and Subscriptions Consulting Services Strategic Studies Glossary About Us News Insights Diversity, Equity & Inclusion Careers Operating Committee Board of Directors Industry Recognition Contact Us © Conning Holdings Limited 2021. All Rights Reserved. Securities are offered through Conning Investment Products, Inc., One Financial Plaza, Hartford, CT 06103 an affiliated broker-dealer. Member of FINRA / SIPC . Use of cookies by Conning Conning uses cookies to deliver our online services. Details and instructions on how to disable those cookies can be accessed in the Conning Cookie Policy link below. By clicking the below ‘Accept & Continue’ button, you consent to our use of our cookies unless you have disabled them. Cookie Policy Accept & Continue