(HOBOKEN, NJ) -- More than one-third of the top 30 largest insurance companies in the U.S. have stopped making commercial real estate loans, reports Commercial Mortgage Alert, an industry newsletter that has been covering the market since the 1980s.

The list includes Northwestern, Allstate, Principal, Aegon and Hartford Life.

Others watching from the sidelines are Nationwide, Genworth, ING, AIG, Sun Life and Protective Life.

Additionally, the newsletter reports, "numerous insurers in the next tier have also pretty much stopped lending."

Several of the largest insurance firms in the country, however, still make loans, the newsletter reports.  They include MetLife, New York Life, Prudential and TIAA-CREF.

But "their ranks are shrinking as the financial crisis widens," the newsletter says.

Industry sources speculate many of the insurers dropping out of the market are doing so only after realizing the large amount of real estate risk they have on their books.

CMA states, "At first, some insurers pulled back by limiting their activity to the refinancing of maturing loans in their portfolios.  But now a growing number of (insurance) companies, squeezed for cash, are telling even those customers to look elsewhere."

The withdrawal of so many insurers "removes billions of dollars in lending capacity from a market already short on credit," the newsletter states. 

The top 30 insurers originated $56.6 billion of commercial mortgages in 2007, the last year for which figures are available, according to Commercial Mortgage Alert.

Northwestern was ranked No. 3 with $4.4 billion in originations.  Allstate was No. 6 with $2.6 billion.  Principal was No. 8 with $2.5 billion.  Aegon was No. 9 with $2.3 billion and Hartford Life was ranked 10th largest with $2.2 billion in new loans.

"The (withdrawal) development is a further blow to the lending market," the newsletter states.  "When the CMBS market (first) seized up, portfolio lenders initially remained active, cushioning the impact of the credit crunch."

Now, the newsletter speculates, those lenders on the sidelines may be out for the rest of 2009.

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