The NAIC Capital Markets Bureau monitors developments in the capital markets globally and analyzes
their potential impact on the investment portfolios of U.S. insurance companies. Previously published
NAIC Capital Markets Bureau Special Reports are available via its web page and the NAIC archives (for
reports published prior to 2016).
Growth in U.S. Insurance Industry’s Cash and Invested Assets Declines to
1.3% at Year-End 2022
Analyst: Michele Wong
Executive Summary
As of year-end 2022, cash and invested assets, including affiliated and unaffiliated investments, reported
by U.S. insurance companies totaled $8.2 trillion. Growth in cash and invested assets slowed significantly
to a 1.3% increase from 2021 to 2022, following year-over-year (YOY) growth of 7% or greater in the
prior three years. Chart 1 shows the book/adjusted carrying value (BACV) of the industry’s total cash and
invested assets from 2013 through 2022, along with annual YOY growth rates. Cash and invested assets
continued to grow steadily on an absolute dollar basis, with BACV increasing almost 50% over the 10-
year period.
• U.S. insurance companies reported $8.2 trillion in total cash and invested assets at year-end
2022, an increase of only 1.3% compared to year-end 2021.
• The U.S. insurance industry’s four largest asset classes remained unchanged, with bonds,
common stocks, mortgages, and Schedule BA assets the largest categories, in that order.
• In 2022, life insurers continued to invest in less liquid assets like mortgages, with exposure
increasing 8.4% compared to 2020.
• The share of bonds in the U.S. insurance industry’s investment portfolio increased to 62.3% at
year-end 2022, while the share of common stocks declined to 13.2% following significant equity
market declines in 2022.
• Asset-backed securities (ABS) and other structured securities and bank loans were again the two
fastest growing bond types in 2022, with exposure increasing 12% and 21%, respectively,
compared to the prior year.
• The credit quality of the bond portfolio improved slightly at year-end 2022, with bonds
designated NAIC 1 and NAIC 2 increasing to 94.7% of total bond exposure from 94% at year-end
2021.
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Chart 1: Historical U.S. Insurance Industry Total Cash and Invested Assets, Year-End 2013–2022
Note: Includes affiliated and unaffiliated investments
Bonds’ Share of the Investment Portfolio Rises While Common Stocks’ Share Falls
The asset mix of U.S. insurance companies’ investment portfolios has remained relatively consistent
over the years. Bonds continue to be the largest component, representing 62.3% of total cash and
invested assets at year-end 2022. Common stock investments are the second largest holding for the
industry at 13.2% of total cash and invested assets, followed by mortgages at 8.9% and Schedule BA
assets at 6.6%. (Refer to Table 1.) The U.S. insurance industry’s four largest asset classes have remained
unchanged since the NAIC Capital Markets Bureau began tracking U.S. insurers’ investment trends in
2010.
Table 1: Total U.S. Insurance Industry Cash and Invested Assets by Asset Class and Insurer Type, Year-
End 2022 (BACV$ in Millions)
Note: Numbers in the table have been rounded.
Asset Class Life P/C Health Title Total
% of
Total
Bonds 3,630,254 1,248,301 189,308 6,127 5,073,991 62.3%
Common Stocks 210,618 817,493 43,830 2,847 1,074,789 13.2%
Mortgages 695,160 29,372 514 12 725,059 8.9%
Schedule BA and Other Assets 324,657 188,258 21,552 384 534,851 6.6%
Cash and Short-Term Investments 143,957 158,127 70,160 2,176 374,420 4.6%
Contract Loans 131,852 2 1 - 131,855 1.6%
Derivatives 95,430 2,350 6 - 97,787 1.2%
Real Estate 22,611 13,147 6,174 206 42,138 0.5%
Other Receivables 31,799 5,093 752 14 37,658 0.5%
Preferred Stocks 17,195 16,526 988 177 34,886 0.4%
Securities Lending (Reinvested Collateral) 14,329 6,196 2,641 - 23,165 0.3%
Total 5,317,863 2,484,864 335,927 11,943 8,150,598 100%
% of Total 65.2% 30.5% 4.1% 0.1% 100%
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Similar to previous years, life and property/casualty (P/C) companies accounted for almost 96% of the
industry’s assets. Life companies held the largest share, or 65.2%, of the industry’s total cash and
invested assets in 2022, while P/C companies accounted for 30.5%. Health and title companies together
represented approximately 4% of the industry’s total cash and invested assets.
The share of bonds in the industry’s investment portfolio had been gradually declining since 2010, given
the low interest rate environment. However, it rebounded in 2022, as interest rates rose significantly
and created bond investment opportunities with more attractive yields. Bonds—which are generally a
stable source of investment income for investors, including insurers—rose to 62.3% of total cash and
invested assets from 61.4% at year-end 2021. (Refer to Table 2.)
Table 2: Total U.S. Insurance Industry Cash and Invested Assets by Asset Class and Insurer Type, Year-
End 2021 (BACV$ in Millions)
Note: Numbers in the table have been rounded.
In comparison, the share of common stocks in U.S. insurer portfolios decreased YOY due, in part, to
significant equity market weakness and lower market valuations as interest rates climbed. The Standard
& Poor’s 500 index (S&P 500), for example, declined approximately 20% in 2022. As of year-end 2022,
common stocks accounted for 13.2% of cash and invested assets, decreasing from 14.6% at year-end
2021. The almost 1.5 percentage point decrease was the first decline in over a decade. Before 2022, the
share of common stocks had been gradually increasing over the years, from 10.3% of the industry’s total
cash and invested assets as of year-end 2010.
Based on a mark-to-market analysis of year-end 2021 investments, U.S. insurers’ unaffiliated publicly
traded common stock holdings experienced a weighted average 18% decrease in value in 2022
compared to 20% for the S&P 500 in the same period. P/C companies are the primary equity investors
within the industry, holding 76% of the overall common stock exposure.
U.S. insurance companies—life companies, in particular—are continuing to increase exposure to
mortgages, which typically offer more attractive and higher yields but are relatively illiquid. Illiquid
investments generally have less credit and pricing transparency and are, therefore, subject to greater
price volatility. Exposure to mortgages has consistently increased over the last 10 years, almost doubling
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to reach $725 billion at year-end 2022. Mortgages represented 8.9% of total cash and invested assets as
of year-end 2022 compared to 6.7% as of year-end 2013. Following a slowdown in the pace of growth in
2020, mortgage exposure grew 6.9% and 8.4% in 2021 and 2022, respectively. (Refer to Chart 2.)
Chart 2: Historical U.S. Insurance Industry Mortgage Exposure, 2013–2022
ABS and Other Structured Securities Rise to Second Largest Bond Type
Bonds are a core investment for U.S. insurance companies and represent a significant percentage of
their invested assets. Following a 2.6% YOY increase, the U.S. insurance industry’s exposure to bonds
surpassed $5 trillion at year-end 2022 for the first time. (Refer to Table 3.) Corporate bonds, ABS and
other structured securities, and municipal bonds remained the three largest bond types in U.S. insurer
investment portfolios, representing 56.1%, 11.2%, and 9.9%, respectively, of total bond exposure. ABS
and other structured securities experienced the largest YOY growth among U.S. insurer bond
investments, with exposure increasing approximately 12% YOY to $570 billion, and as a share of total
bond exposure, increasing to 11.2% from 10.3% at year-end 2021. (Refer to Table 4.) Given the
significant increase in YOY exposure, ABS and other structured securities rose to the second largest bond
type for the industry at year-end 2022 (from the third largest), while municipal bonds fell to the third
largest (from the second largest).
U.S. government bonds, agency-backed residential mortgage-backed securities (RMBS), and private-
label commercial mortgage-backed securities (CMBS) accounted for the next three largest bond types.
These bond types had little to no change in their share of total bond exposure YOY.
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Table 3: Bond Breakdown by Insurer Type, Year-End 2022 (BACV$ in Millions)
Note: Numbers in the table have been rounded.
Table 4: Bond Breakdown by Insurer Type, Year-End 2021 (BACV$ in Millions)
Note: Numbers in the table have been rounded.
U.S. insurance companies continued to turn to ABS and other structured securities for higher yields in
2022 despite rising interest rates and more attractive yields in less risky securities. In addition to
consumer ABS, the “ABS and Other Structured Securities” category includes collateralized loan
obligations (CLOs), commercial ABS, and lease-backed securities, among other types of structured
finance investments. This has been a high-growth bond category with exposure to ABS and other
structured securities, increasing more than 11% in each of the last five years and increasing almost 80%
since year-end 2017, when exposure totaled $319 billion. (Refer to Chart 3.)
Bond Type Life P/C Health Title Total
% of
Total
Corporate Bonds 2,279,314 490,470 77,022 3,117 2,849,923 56.1%
ABS and Other Structured Securities 448,581 103,038 18,163 45 569,826 11.2%
Municipal Bonds 217,627 263,328 22,859 976 504,790 9.9%
U.S. Government 140,633 157,584 24,076 515 322,808 6.4%
Agency-Backed RMBS 114,481 96,062 25,656 810 237,008 4.7%
Private-Label CMBS 162,383 46,791 9,957 13 219,144 4.3%
Bank Loans 95,324 17,784 2,178 193 115,479 2.3%
Private-Label RMBS 78,575 21,958 3,364 1 103,898 2.0%
Agency-Backed CMBS 41,174 27,329 1,813 79 70,394 1.4%
Foreign Government 48,383 18,941 1,202 348 68,873 1.4%
Exchange-Traded Funds (ETFs) 4,250 4,747 2,853 25 11,876 0.2%
Other 1,800 270 164 7 2,240 0.0%
Total 3,632,524 1,248,302 189,308 6,127 5,076,261 100%
% of Total 71.6% 24.6% 3.7% 0.1% 100.0%
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Chart 3: Historical U.S. Insurance Industry ABS and Other Structured Securities Exposure, 2018–2022
While bank loans represent a small percentage of total bonds, they have also been a fast-growing bond
type in U.S. insurer portfolios. Exposure in terms of BACV increased 21% YOY to $115 billion as of year-
end 2022, following YOY growth rates of 30% and 13% in 2021 and 2020, respectively. The significant
growth has resulted in the industry’s exposure to bank loans exceeding the 2% mark for the first time, at
2.3% of total bonds. Bank loans represented the seventh largest bond type in insurers’ investment
portfolios at year-end 2022, ahead of both private-label RMBS and agency-backed CMBS.
Portfolio Credit Quality Improves, but Credit Challenges Abound
The credit quality of U.S. insurance companies’ bond investment portfolios has continued to improve
following the broad-based deterioration in credit quality in 2020 due to the effects of the COVID-19
pandemic. Investment grade bonds, or those with reported NAIC 1 or NAIC 2 designations, accounted
for 94.7% of total bonds, representing an increase from 94% at year-end 2021 (Refer to Chart 4 and
Chart 5) and reflecting a marginal improvement in credit quality. Below-investment-grade bonds, or
those with reported NAIC 3 designations and below, decreased to 5.3% of total bond exposure at year-
end 2022 after reaching 6.1% in 2020. High-yield bond exposure, therefore, remains slightly above the
pre-pandemic level of 5.1% at year-end 2019.
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Chart 4 and Chart 5: Reported Credit Quality of U.S. Insurance Industry’s Bond Portfolio at Year-End
2022 (Left) and Year-End 2021 (Right)
Despite recovering from the broad-based effects of the COVID-19 pandemic, credit conditions in the U.S.
remain challenging, given several factors. Higher interest rates have not only exacerbated both bond
and equity market volatility but are also leading to less attractive and more expensive financing
conditions. Highly leveraged companies with less financial flexibility will be hit hardest by the higher cost
of and tighter financing. While inflationary pressures are easing in 2023, they continue to weigh heavily
on companies’ margins and profitability as input and raw material costs remain elevated. Inflation is also
hurting consumers, who are pulling back on their discretionary spending. In addition, the potential for a
recession in the near term poses new challenges to overall revenue growth and credit in general in 2023
and into 2024. These challenging operating and financing conditions will likely pressure credit quality
and could result in a rise in credit downgrades and perhaps even defaults in the coming months.
U.S. insurers primarily invest in securities with high credit quality, which generally should be able to
withstand the aforementioned credit pressures (as long as they are not severe or prolonged). However,
particular consideration should be given to concentrations in areas currently experiencing particular
stress, such as consumer-reliant sectors (like retail, consumer products, and media and entertainment),
as well as small and regional banks.
The NAIC Capital Markets Bureau will continue to monitor trends in the U.S. insurance industry’s various
invested asset types and report as deemed appropriate.
NAIC 1
62.4%
NAIC 2
32.3%
NAIC 3
3.2%
NAIC 4
1.6%
NAIC 5
0.4%
NAIC 6
0.1%
Year-End 2022
NAIC 1
61.4%
NAIC 2
32.6%
NAIC 3
3.7%
NAIC 4
1.8%
NAIC 5
0.4%
NAIC 6
0.1%
Year-End 2021
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