WASHINGTON — Life insurance companies are an untapped source of potential new Federal Home Loan Bank members, according to analysts at Fitch Ratings.

The analysts said that only 16% of life insurance companies were members of a Home Loan bank by the end of 2014.

"Certain FHLB districts have focused their marketing efforts on insurance companies in recognition of the role they play in the U.S. housing marketplace," the report said.

The Chicago, Des Moines and Cincinnati Home Loan banks had the most life insurance company membership growth over the five years that ended Dec. 31, 2014.

"New insurance companies in these districts represent 49% of the 77 insurance members added FHLB systemwide during that period," the report said.

The Federal Housing Finance Agency recently ruled that captive insurers can no longer be Home Loan bank members and existing captives have to exit the system over the next five years.

But life insurance companies have been members since the creation of the system in the 1930s. They are the "most natural fit for FHLB membership," the report said. "There is also strong growth potential" within the property and casualty insurance sector.

Insurance companies can only seek membership in districts where they are headquartered.

"The average insurance company penetration rate in FHLB districts is only 6%. The Indianapolis FHLB leads the way with an 18% penetration rate," the report said.

Many life insurers joined the system during the financial crisis to gain access to advances and boost their liquidity.

Access to Home Loan bank advances "supports our view of the company's liquidity," Fitch analyst Douglas Meyer said in an interview Friday. "In a certain stress situations, their ability to access to liquidity through the system may prevent downgrades."

Meyer noted that Fitch is not predicting there will be a rapid growth in life insurance company membership, "but the low penetration rates suggest that there is an opportunity for additional growth."

Meanwhile, life insurance company borrowings from the Home Loan banks grew by only 0.6% in 2014. But the banks are trying to coax more borrowing by accepting commercial real estate loans as collateral.

"The growth of commercial whole loans as well as municipal securities as acceptable collateral by some FHLBs has driven growth in advances to existing insurance company members," the Fitch report said.

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