WASHINGTON - Eight leading California insurers announced a $40.5 million affordable housing investment Wednesday.

The investment followed the consideration in a half-dozen state legislatures of imposing community reinvestment mandates on insurance companies.

Allstate Insurance Co., Farmers Insurance Cos., Pacific Life Insurance Co., PMI Mortgage Insurance Co., SAFECO Insurance, State Farm Insurance Cos., Teachers Insurance and Annuity Association, and 21st Century Insurance Co. securitized the mortgages on 12 multifamily rental properties in low- and moderate-income communities throughout California.

The insurers, acting through their investment management arm, Impact Community Capital, obtained A and BBB ratings from Standard & Poor's for 65% of the mortgage pool, which allows Impact to issue investment-grade securities. The insurers will take a capital charge on the non-investment-grade portion.

"They felt this was important to demonstrate to communities and to legislatures that insurers are able and willing to do this on a voluntary and collective basis, as opposed to be mandated to do it by CRA-type legislation," said Daniel F. Sheehy, president and chief executive officer of Impact.

The insurers purchased the mortgages from the California Community Reinvestment Corporation, a nonprofit lending consortium of 45 California banks and thrifts that originated the loans. By yearend Impact plans to invest an additional $40 million to $50 million in the pool, and to create a new pool with an initial $50 million investment in single-family mortgages.

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