[May 17, 2018]

Life Insurers Offer Ready Source of Infrastructure Capital, Need Policymaker Support

According to a new white paper from TIAA, a leading financial services provider, public-private partnerships (P3s) have proven to be valuable in building our nation's infrastructure, yet they remain under-utilized due to public policy challenges that deter life insurance companies from investing in them. The paper suggests several modest regulatory and policy reforms to encourage more P3 project investment by insurers, including the adoption of consistent regulatory guidelines, the preservation of key tax tools, and streamlining the project approval process.

"America's infrastructure - the backbone of our economy - is in need of new approaches to investment," said Roger W. Ferguson, Jr., president and CEO, TIAA. "Insurance companies', such as TIAA's, long-term investment approach and ample capital are well-suited to contribute to rebuilding our nation's infrastructure."

Amid growing national infrastructure needs and limited public funding, the P3 model has emerged as a promising financing approach to provide the capital and long-term commitment necessary to fund essential improvements. The White House's recent infrastructure proposal recommends leveraging P3s alongside traditional mechanisms such as federal and private funding and municipal bonds.

Life insurance companies look for diverse investments to meet obligations to policyholders, which often do not come due until far in the future. Infrastructure projects are particularly attractive investments due to their lower risk, longer, stable terms and generally predictable, steady returns. As of 2017, life insurance companies had collectively invested over $1 trillion in infrastructure projects.ⁱ But the current patchwork of federal and state P3 rules, replete with inconsistent, complex regulations, structures and procedures, often deters greater private-sector investment.

Drawing on its not-for-profit heritage and a century of insurance experience, TIAA recommends four bipartisan policy reforms to enable increased, sustained investment by insurers:

• Define consistent rules and methodologies across geographies: Bring a more consistent structure to the patchwork of regulations governing P3s to create a more structured market and encourage more private investment, including by insurers.
• Form an industry working group at the National Association of Insurance Commisioners (NAIC): Gather recommendations regarding the creation of incentives, the removal of regulatory impediments, and the expediting of approvals for insurance companies' infrastructure investments to produce state-level best practices and a successful framework for P3s.
• Preserve key tax tools: Maintain and even broaden tax exemptions on certain governmental bonds to sustain and further incentivize infrastructure investment by insurance companies.
• Expedite approval processes: Streamline the permitting and review processes to ensure infrastructure projects advance in a more coordinated, efficient manner, while maintaining appropriate oversight.

Existing levels of public funding alone cannot close the significant shortfall to meet America's current and future infrastructure needs. TIAA welcomes the opportunity to work with policymakers, regulators, industry partners and other stakeholders to improve industry and governmental review processes, incentivize long-term commitments, secure strong returns and support the public good.

To download a copy of TIAA's white paper on opportunities for infrastructure investment by life insurers, visit http://www.tiaa.org/infrastructure.

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About TIAA

With an award-winningⁱⁱ track record for consistent investment performance, TIAA (TIAA.org) is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has nearly $1 trillion in assets under management (as of 3/31/2018ⁱⁱⁱ) and offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.

TIAA-CREF Individual & Institutional Services, LLC, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.

© 2018 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

ⁱ Dimitris Karapiperis, Ctr. for Ins. Pol'y & Research, Infrastructure Investment and the Insurance Industry, CIPR NEWSLETTER (Aug. 2017), http://www.naic.org/cipr_newsletter_archive/vol22_infrastructure.pdf.

ⁱⁱ The Lipper Large Fund Award is given to the group with the lowest average decile ranking of three years' Consistent Return for eligible funds over the three-year period ended 11/30/12 (36 fund companies), 11/30/13 (48), 11/30/14 (48), 11/30/15 (37), 11/30/16 (34) and 11/30/17 (34) with at least five equity, five bond, or three mixed-asset portfolios. For the Mixed-Assets category, TIAA ranked against 39, 36 and 35 fund families for the three-year period ended 11/30/15, 11/30/16 and 11/30/17, respectively. Note these awards pertain to mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson (News - Alert) Reuters Lipper Awards, © 2018 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Past performance does not guarantee future results. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. For current performance, rankings and prospectuses, please visit the Research and Performance section on TIAA.org. Nuveen Securities, LLC, member FINRA and SIPC.

ⁱⁱⁱ Based on $999 billion of assets under management across Nuveen Investments affiliates and TIAA investment management teams.

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