Total cash and invested assets for PE-owned US insurers rises to $487bn

Written by Adam Cadle

16/07/2021

The number of private equity (PE) owned US insurers totalled 117 at year-end 2020, with the total cash and invested assets for these insurers recorded at $487bn in book/adjusted carrying value (BACV), up from $344bn at year-end 2019.

According to the NAIC Capital Markets Bureau, the majority of PE-owned US insurers were life companies, and similar to the overall US insurance industry, bonds were the largest asset type for PE-owned insurers, at 74% of their total cash and invested assets. Corporate bonds were the largest bond type, at about 49% of total bonds.

The concentration on non-traditional bonds – i.e., asset-backed securities (ABS) and other structured securities (which includes CLOs) – was higher for PE-owned insurers in terms of the percentage of total bonds, compared to the overall US insurance industry at year-end 2020.

About 95% of unaffiliated corporate bond exposure carried NAIC 1 and NAIC 2 designations, implying high credit quality.

Other long-term invested assets (as reported in Schedule BA) remained constant as a percentage of total cash and invested assets year over year (YOY). However, total BACV increased.

Schedule DA investments for PE-owned insurers increasedby 2.6% from 2019 to 2020 in terms of BACV; one PE-owned insurer accounted for about 35% of the exposure at year-end 2020.

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