US insurers' ETFs drop by 23.5% to $36.6bn

Written by Adam Cadle

30/05/2023

The amount of ETFs held by US insurance companies in their general accounts dropped by 23.5% (or $11.2bn) in 2022 to US$ 36.6bn, latest figures published by S&P Dow Jones Indices have shown.

This represents the first substantial drop in ETF assets since insurance companies started buying ETFs in 2004.

“However, two factors complicate analysing the drop in ETF assets,” the firm said. “The first is the unusual bear market we had in 2022, with both equity and fixed income markets showing sharp declines—the S&P 500® dropped 19.4% and the S&P U.S. Investment Grade Corporate Bond Index dropped 14.3%. In 2022, insurers withdrew US$4.1bn from ETFs, so valuation declines explain approximately two-thirds of the drop in AuM. Also in 2022, two mega insurers decided to exit all public equites, including ETFs. This represented US$3.5bn of all the withdrawals. Excluding these two companies from the analysis, insurer ETF AuM declined by 16.5%—or in line with market results."

Even though most US insurer assets are in fixed income, insurers typically invested in equity ETFs. This continued to be the case, even with the large amount of equity ETFs sold by the two mega companies. Outside of these two companies, flows into equity ETFs and away from fixed income ETFs were seen.

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