US insurers’ exposure to foreign investments decreases by 17% to $360bn

Written by Adam Cadle

15/11/2023

US insurers’ exposure to foreign investments decreased y-o-y by 17% to around $360bn at year-end 2022, from $436.7bn at year-end 2021, according to the NAIC.

Over the past decade, US insurers’ exposure to foreign investments has decreased by 44% from $650bn in 2012.

The NAIC said the decline in exposure “may be due in part to geopolitical events, such as trade tensions between the US and China and the war between Russia and Ukraine, among other factors, including those related to climate risk and the COVID-19 pandemic”. It added: “Macroeconomic factors may have also played a role in the declining trend, such as the lower-for-longer interest rate environment followed by increasing interest rates to combat high inflation over the past couple of years.”

Similar to prior years, the majority of US insurers’ foreign investments were in bonds – 92% of the total at year-end 2022. Life companies accounted for the majority of exposure at 80% of the total, followed by P&C companies at 18%. Large insurers, or those with more than $10bn AuM, accounted for 83% of total US insurer foreign investments.

The UK, Canada, and Australia represented the largest three country exposures in both 2022 and 2021 and on an aggregate basis represented about 50% of US insurers’ total foreign investments.

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