U.S. insurance companies held $ 36.9 billion in exchange-traded funds in general accounts as of Dec.31, an 18.4% increase from the previous year, according to a report by S&P Dow Jones Indices.
Although the total invested in ETFs is only a tiny fraction of the $ 7.1 trillion in general account assets of U.S. insurance companies, the report indicates that the increase in ETF assets under management in 2020 was at a higher rate than the 16% increase in 2019.
The report says the growth rate implies a doubling of the ETF’s AUM every four to five years. S&P Dow Jones Indices has data going back to 2004, when there was less than $ 5 billion in AUM ETFs in the general accounts of insurance companies.
“The continued growth in the use of ETFs by insurance companies comes both from new companies starting to use ETFs and from companies already using ETFs buying more ETFs,” said Raghu Ramachandran, manager. of the Insurance Asset Channel at S&P Dow Jones Indices and author of the report. , in a press release announcing the report.
“Even though insurers invest primarily in fixed income securities, they had historically invested in equity ETFs. However, in 2020, these companies increased the use of fixed income ETFs by 52%,” he said. -he declares. “I think it’s also interesting that in 2020, insurers traded four times the amount of Fixed Income ETFs they held at the start of the year. So they are using the liquidity of the ETF market at their own expense. advantage.”
The report is available on the S&P Dow Jones Indices Website.