As life insurance companies give Fannie Mae and Freddie Mac a run for their money, many agency-focused lenders are now building up their life company networks.

Walker & Dunlop, CWCapital, and Berkadia are among a growing list of lenders looking to diversify their debt sources, both to give customers more choices and to protect themselves against the uncertainty surrounding the government-sponsored enterprises (GSEs).

“We weren’t active in that business for a long time, but it’s been heating up over the last six to eight months, and so far it’s been a really good addition,” says Don King, head of agency production at Boston-based CWCapital. “We wanted our clients to use us for all of their capital needs, so that was our primary driver. And who knows what will happen with the GSEs. That’s part of the equation, too.”

CWCapital has more than a dozen life company relationships and that number should rise. Earlier this year, the firm hired Greg McManus, former Capmark CFO, to lead a team focused on expanding the company’s executions, including life company programs. The firm also recently hired Mischa Guenther, formerly a director in the New York multifamily division of Wells Fargo, who will be responsible for securing life company bids.

Since each life company has its own specific appetite—some focus on larger deals over $15 million in primary markets, some will go down to $3 million in secondary markets—it’s important to have several in the stable. “Once you start looking at their individual boxes, you don’t generally see 12 bidding on each deal,” King says. “Each company has a very specific box.”

Walker & Dunlop is also focusing on bulking up its life company correspondence. The firm is looking to bring in additional mortgage banking talent to help build out its life company correspondent reach.

“I’m out there doing a ton of M&A work, trying to get some deals put together,” says Willy Walker, president and CEO of Bethesda, Md.-based Walker & Dunlop, which went public toward the end of 2010. “We don’t really need additional exposure to the agencies. We’re looking for mortgage banking firms that understand credit, and if I have to make a generalization, have probably done more business with life insurance companies.”

Walker & Dunlop has 10 life company relationships, but those arrangements are centered in the Mid-Atlantic region. Like Freddie Mac, life companies assign relationships based on certain geographic areas. And if a lender can’t feed them the volume of business they’re looking for, life insurance companies will find another lender active in that region.

“One of the other issues is to grow our insurance correspondent relationships across the country,” Walker says. “In competitive markets like Washington, D.C., if you have 20 life insurance companies, there’s no way you’re going to feed enough business to all 20.”

Like CWCapital, Berkadia also finds itself recently recapitalized with a new owner and hungry for growth. In May, Berkadia hired Andrew Orloff to serve as the company’s liaison to life insurance company lenders. Orloff previously worked for eight years in the commercial mortgage department at Chicago-based Draper and Kramer, a property and financial services company.

“We do have a lot of life company relationships, but you need to pay attention to them, to have a dedicated person for that source of capital,” says John Cannon, executive vice president with Horsham, Pa.-based Berkadia Commercial Mortgage. “You need to make sure you hit their volume, yield, and asset-quality requirements—if you miss on any of those three things, they will look elsewhere.”