Insurers historically have been more active investors in the high-yield bond market than the loan market, in part because the securities often lack call protection, said Chris Taggert, a senior analyst at research firm CreditSights Inc. That makes income from debt instruments harder to match to an insurer's return requirements, he said. The call feature aids investors by penalizing issuers if they redeem debt before it matures.

Most loans are floating-rate instruments based off the London interbank offered rate, or Libor. Three-month Libor for dollar loans rose to 0.36522 percent yesterday from 0.36278 percent on Sept. 26, according to data from the British Bankers' Association.

"Some of the challenges that didn't make loans all that appealing in the past still remain," said Taggert, in a phone interview. "If you're an investor who is seeking to earn a current income, low Libor is a factor."

Average Libor

The average minimum Libor that companies offered was 1.375 percent for the month ended Sept. 15, according to Standard & Poor's Leveraged Commentary & Data.

Owning fixed-income securities that don't use U.S. benchmark rates may be a benefit, said BlackRock's Hart. The Fed has pledged to keep its benchmark rate low through mid-2013 if unemployment stays high and the inflation outlook is "subdued."

"Every insurer is looking at yield, and they're also saying to themselves, 'Should we be tied to the mast of U.S. government rates as our benchmark, given where rates are and predicted to be through 2013,'" said Hart.

Pricing for loans rated B+ or B rose to 577 basis points in the month ended Sept. 15, according to S&P's LCD. The average all-in spread -- which includes upfront fees amortized over an assumed three-year life and Libor floors -- was at a record low of 214 basis points in February 2007 as the buyout boom was peaking. A basis point is 0.01 percentage point.

Terms for some loans may be changing. Lenders are asking for call protection on loans, which may make them more attractive to insurers, said Richard Farley, a New York-based attorney with Paul Hastings LLP, which advises banks that syndicate loans.

"Insurance money has become a lot more relevant in terms of what you need to get a deal done because the retail money isn't there," he said.