Increase in number and total investments of PE-owned US insurers recorded

Written by Adam Cadle

15/08/2023

The number of private equity-owned US insurers identified by the NAIC Capital Markets Bureau increased to 137 as of July 2023, up from 132 at year-end 2021 and year-end 2022, and total cash and invested assets for the 137 increased by 13% to $533.7bn in BACV based on year-end 2022.

According to the NAIC, the value of total cash and invested for the 137 PE-owned insurers represented 6.5% of total US insurers’ total cash and invested assets.

Similar to the overall US insurance industry, bonds were the largest asset type for PE-owned US insurers and were 66% of total cash and invested assets at year-end 2022. Corporate bonds were the largest bond type at about half of the total for PE-owned insurers; the concentration of asset-backed securities (ABS) and other structured securities (i.e., nontraditional bonds) was higher for PE-owned insurers in terms of the percentage of total bonds (29%), compared to the overall US insurance industry (11%) at year-end 2022.

Similar to prior years, about 96% of PE-owned insurers’ bond exposure carried NAIC 1 and NAIC 2 designations, implying high credit quality.

Other long-term invested assets reported in Schedule BA increased 24% year-over-year (YOY) in terms of BACV but remained consistent in terms of percentage of total cash and invested assets at 6%.

Schedule DA (short-term investments) for PE-owned insurers increased by a small amount in terms of BACV from 2021 to 2022; the top three PE-owned insurers accounted for 60% of the exposure at year-end 2022.

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