US insurers’ EM bond/stock investment exposure of $42.1bn follows decreasing trend

Written by Adam Cadle

09/05/2022

US insurers’ EM investments totalled $42.1bn in bonds and stocks at year-end 2021, representing an approximate 2.5% decrease from $43.2bn at year-end 2020 and a decreasing trend in total exposure since 2018.

According to the National Association of Insurance Commissioners (NAIC), almost all EM exposure (96% of the total), has been in bonds, which have been in the $40bn range since 2013. For the US insurance industry, EM investments have historically accounted for less than 1% of total cash and invested assets.

At year-end 2021, similar to prior years, life companies accounted for the majority of US insurers’ EM investments, at 87% of the total, or $36.5bn, followed by P&C companies, at 12% of the total, or $5bn.

Corporate EM bonds accounted for more than half of US insurers’ total EM bond investments at $22.8bn; the largest EM corporate bond country exposure for US insurers was Mexico at $10.9bn. Almost 90% of US insurers’ exposure to EM bonds was investment grade at year-end 2021, evidenced by NAIC 1 and NAIC 2 designations.

EM stocks accounted for around $1.9bn of total EM investments; the largest EM country stock exposure was China, at 29% of total EM stocks.

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