Life insurance Dallas has found a new area in which to invest – real estate. Commercial mortgages have presented a market as volatile as the one on Wall Street. Soft money lenders have lost their appetite for commercial mortgages, putting many businesses in a bind when they need to maintain operation or, heaven forbid, expand their business.

But, this doesn’t mean that commercial mortgages are in never-never land. Companies that handle life insurance have stepped into the void, and are now taking up the mortgages from which traditional soft money lenders have retreated.

This year, in the second quarter alone, life insurance companies provided nearly $16 billion in brand new mortgages for commercial applications. This is the largest quarter since 1965, doubling the number of underwritten loans for the first ¼ of this year. This also represents a 26% increase over the 2005 record of $12.5 billion in the final quarter of the year.

Wall Street banks are usually the largest lenders for commercial loans, but they are keeping a low profile in this weak economy. Their lack of action is leaving plenty of room for life insurance Dallas and other insurance investors to step in. In fact, it has left the life insurance companies as virtually the only lenders for the commercial sector.

The difference between the investment bankers of Wall Street and the life insurance companies is the way in which they handle their risks. The investment bankers pool their mortgages, issuing bonds against them. In this way they can transfer the risk from accounting balance sheets. With apparent risks gone, they are free to make even more loans, taking bigger risks.

The life insurance companies, however, are more conservative in their lending, choosing dependable borrowers with valuable property. They keep all of their loans on their own balance sheets without pooling them.

Investment banks still own most of the commercial debt as far as real estate goes. Compare the 33.4% of total outstanding debt held by investment banks, as opposed to 12.8% in the books of life insurance companies. However, in a stagnant, if not flat-line market, the big bankers have only seen a .1% increase in loans in the second quarter of this year. Life insurance companies have seen a 1.5% increase over the same period.

When you compare the bookkeeping between the investment banks and the life insurance companies, it seems that the life insurance companies are being a little more conservative and selective than some of the big bankers, and it’s paying off. The insurance companies are haven’t been burned. MetLife, for instance, had lent out their budget in the first three quarters if this year, some of it going to the mall builder General Growth Properties. A plum worth picking, the investment banks were having to count their pocket change while MetLife added GGP to its portfolio.

One of the reasons for the edge that life insurance Dallas has in investments is that, since insurance companies don’t pool loans, they don’t have to sell bonds. This keeps consumer prices down.