FHLB US insurers’ membership grows 6% in 2022

Written by Dan McGrath

21/06/2023

The number of US insurers that were members of the Federal Home Loan Bank (FHLB) increased by 6% by the end of 2022, compared to the end of 2021.

The latest Capital Markets Special Report from the National Association of Insurance Commissioners (NAIC) found that there were 560 members at the end of last year, growing from 527 at the end of 2021, with half (49%) of those being property/casualty (P/C) companies.

The report also found that a total of $7.4bn in par value of capital stock was held by insurers at the end of 2022, an increase from $6.6bn at the end of 2021.

The number of US insurers that were FHLB members represented 12.4% of the total number of insurers at year-end of 2022, increasing from 11.5% at year-end 2021.

As a result of being members and purchasing capital stocks, these companies can borrow from the 11 FHLB regional banks, i.e. advances.

According to the report, FHLB advances can be used for various purposes and represent a stable source of low-cost funding, with maturities that can vary from short-term to up to 30 years, depending on the needs of the US insurer.

The statutory financial statements for year-end 2022 show that 268 US insurers reported having FHLB advances, up from 256 in 2021.

In addition to this, insurers may also invest in FHLB bonds, although they do not have to be members to do so. A total of $7.4bn in par value of capital stock was held by insurers at the end of 2022, an increase from $6.6bn at the end of 2021.

Furthermore, US insurers reported about $138.5bn in book/adjusted carrying value (BACV) of FHLB advances outstanding at the end of 2022, an 18% increase from 2021, which was listed at $117.1bn.

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