PE-owned US insurers’ investments decrease by around 3%

Written by Adam Cadle

20/09/2022

Total cash and invested assets for private equity (PE) insurers decreased by around 3% to $472bn in book/adjusted carrying value (BACV) as of year-end 2021, according to latest figures published by the NAIC.

Total cash and invested assets for PE-owned insurers was about 6% of the US insurance industry, and the majority of PE-owned insurers continues to be life companies.

Similar to the overall US insurance industry, bonds were the largest asset type for PE-owned US insurers, at 69% of their total cash and invested assets. Corporate bonds were the largest bond type at about half of total bonds for PE-owned insurers. The concentration of non-traditional bonds was higher for PE-owned insurers in terms of the percentage of total bonds (39%), compared to the overall US insurance industry (24%) at year-end 2021.
About 95% of PE-owned insurers’ bond exposure carried NAIC 1 and NAIC 2 designation, implying high credit quality.

Other long-term invested assets (as reported in Schedule BA) increased a small amount in terms of BACV but decreased as a percentage of total cash and invested assets year over year.

Schedule DA (short-term investments) for PE-owned insurers increased by about 41% from 2020 to 2021 in terms of BACV; one PE-owned insurer accounted for 29% of the exposure at year-end 2021.

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