US insurers’ high-yield bond exposure declines at year-end 2022 to $269bn

Written by Adam Cadle

13/11/2023

US insurance companies’ exposure to high-yield bond investments declined 8.8% to $269bn compared to the prior year, the National Association of Insurance Commissioners (NAIC) has revealed.

High-yield bond exposure accounted for 5.3% of total bonds at year-end 2022, a relatively large decline from 6% at year-end 2021, as US insurers reduced risk amid a rising rate environment.

Corporate bonds and bank loans represented the majority of the year-end 2022 high-yield exposure at 60.6% and 23.8%, respectively. The credit distribution of the industry’s high-yield exposure remained relatively unchanged, with 61% of the industry’s exposure at year-end 2022 to bonds with NAIC 3 designations.

High yield exposure, in terms of BACV and as a percentage of total bonds, decreased in 2022 compared to the prior year at all insurer types, particularly at P&C and health insurance companies.

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