Bank loans one of fastest-growing asset types for US insurers

Written by Adam Cadle

12/07/2023

Bank loans were one of the fastest-growing asset types in 2022 for US insurers, the NAIC has revealed, increasing by 21% to $117bn in BACV from $97.2bn in 2021.

Despite this double-digit growth, however, bank loans were under 2% of US insurers’ total cash and invested assets at year-end 2022, and about 75% were acquired in market transactions. The remaining 25% were issued by the reporting entities.

Large life companies, or those with more than $10bn in AuM, accounted for almost 80% of US insurers’ bank loan exposure, up from 74% in 2021.

The NAIC also said there was continued improvement in credit quality for US insurer bank loans, evidenced in part by a decrease in those carrying NAIC 4 Designations – i.e, implying a B credit rating – to 26% of total bank loans in 2022 from 33% in 2021, and countered by an increase in bank loans carrying NAIC 1 Designations to 24% in 2022 from 18% in 2021.

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