Master Limited Partnerships: Energized Investment Income For Insurance Companies

July 21, 2013 by and Marcus V. McGregor

Master Limited Partnerships (MLPs) are an attractive way for property/casualty insurance companies to participate in the strong fundamental trends occurring in the U.S. energy sector.Executive SummaryHistorically strong investment performance and tax-deferred distributions make Master Limited Partnerships an attractive way for property/casualty insurance carriers to participate in the strong fundamental trends occurring in the U.S. energy sector, according to Conning’s Marcus McGregor, who explains their history and the best opportunities among MLP choices to provide consistent and predictable investment earnings.

Executive Summary

Historically strong investment performance and tax-deferred distributions make Master Limited Partnerships an attractive way for property/casualty insurance carriers to participate in the strong fundamental trends occurring in the U.S. energy sector, according to Conning's Marcus McGregor, who explains their history and the best opportunities among MLP choices to provide consistent and predictable investment earnings.

A majority of distributions are tax-deferred and are compelling versus most other dividend-paying equities. Historical performance of the sector has been stronger than most other major asset classes.

Accounting and reporting treatment is no different from other publicly traded common stocks. While tax accounting is more complex for MLPs than it is for many other investment vehicles, Conning believes that the increased administrative burden is likely to be offset by the optimal risk-return performance of MLPs.

Conning also believes that the strong fundamentals behind the U.S. energy boom will continue to support growth in the MLP sector. MLPs primarily focused on pipeline transportation and storage should benefit the most from the rise in oil and gas production due to the need to expand infrastructure.