By the Numbers
A short, sweet snapshot of P&C insurer investments
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.
P&C insurers followed their lifer peers in posting record investment portfolio balances last year, raising yields and improving portfolio credit quality. But unlike the lifers, appetite for private debt plateaued and higher allocations to equities, cash, government bonds and higher-rated corporate and CLO debt spoke to a sharper emphasis on liquidity. Makes sense for insurance lines with frequent and sometimes volatile claims. The median P&C corporate bond is ‘A’ instead of lifers’ median of ‘BBB+’. And the median P&C maturity is 4.2 years instead of lifers’ 8.1 years. Allocation to mortgage loans and CLOs is also smaller than lifers’. A chartbook of results is here.
P&C insurers now hold a record $2.3 trillion in cash and investments but are only 44% as large and continue to grow more slowly than life portfolios
Note: P&C holdings grew 5.9% in 2023, faster than the 4.8% 9-year CAGR. Life holdings grew 6.9% in 2023, faster than the 4.4% 9-year CAGR. Data shows statutory filings only, excluding affiliates investment. Statutory filings do not include investments at non-operating hold cos, non-insurance op cos or foreign subsidiaries.
Source: from CreditSights, “US Life Ins: Investment Portfolio Trends YE2023
P&C yields dropped 21 bp into YE2023, skewed by Berkshire Hathaway’s results; yields ex-BRK would have moved 11 bp higher
Note: Excluding BRK, CreditSights estimates industry yield would go from 3.22% to 3.33%.
Source: from CreditSights, “US P&C Insurance: Investment Portfolio Trends YE2023
Bonds still dominate P&C portfolios at YE2023, but higher balances in equity and cash relative to lifers’ highlight liquidity needs
Note: Fixed income share has dropped 6 percentage points in the last decade with mortgage loans and alternatives picking up the slack. Data shows statutory filings only, excluding affiliates investment.
Source: company reports, S&P CapIQ, CreditSights.
Industrial bonds—NAIC-speak for corporate, structured credit—dominate bond holdings, but Treasury and muni holdings show liquidity, tax needs
Note: Industrial bonds, alternatives and affiliated securities have picked up share in the last decade with other types of bonds losing share. Data shows statutory filings only, excluding affiliates investment.
Source: company reports, S&P CapIQ, CreditSights.
P&C bond credit quality has improved since the NAIC reset capital in 2020 to favor higher ratings; P&C holds higher quality than life portfolios
Note: statutory filings only, excluding affiliates investment. Source: company reports, S&P CapIQ, CreditSights.
The median P&C corporate bond is ‘A’, the median life corporate is ‘BBB+’
Note: statutory filings only, excluding affiliates investment. Source: company reports, S&P CapIQ, CreditSights.
The median P&C bond maturity is 4.2 years, the median life maturity is 8.1 years
Note: Life insurers increasingly have barbelled around the middle of the yield curve, holding more 1Y-5Y and 10Y-20Y maturities and shrinking exposure to 5Y-10Y. Data shows statutory filings only, excluding affiliates investment.
Source: company reports, S&P CapIQ, CreditSights
P&C share in private securities, including 144A and other forms, has flattened as life share in private securities continues to rise
Note: statutory filings only, excluding affiliates investment.
Source: company reports, S&P CapIQ, CreditSights.
P&C portfolios held $32 billion in mortgage loans at YE2023 or 1.4% of the portfolio while lifers held $734 billion or 13.7% of portfolio
Note $ million.
Source: from CreditSights, “US P&C Insurance: Investment Portfolio Trends YE2023”
P&C portfolios held $49 billion in CLOs at YE2023 or 2.1% of the portfolio while lifers held $223 billion or 4.5% of the portfolio
Note $ million.
Source: from CreditSights, “US P&C Insurance: Investment Portfolio Trends YE2023”
P&C portfolios hold CLOs with higher ratings than life portfolios
Source: from CreditSights, “US P&C Insurance: Investment Portfolio Trends YE2023” and “US Life Ins: Investment Portfolio Trends YE2023”
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