ETFs in Insurance General Accounts – 2021

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The following is an excerpt of “ETFs in Insurance General Accounts – 2021” by Raghu Ramachandran of S&P Dow Jones Indices. To read the full report, please visit the S&P DJI website.


U.S. insurance companies added USD 4 billion to exchange-traded funds (ETFs) to their general account portfolios in 2020.  By year-end 2020, U.S. insurers increased their ETF AUM by 18% from 2019.  Life companies, in particular, returned to the market and purchased large amounts of ETFs.  In spite of, or because of, the volatility in the bond market, insurance companies had strong flows into Fixed Income ETFs, adding USD 5 billion in 2020. 

In our sixth annual study of ETF usage in U.S. insurance general accounts, for the first time we analyzed the trading of ETFs by insurance companies in addition to the holding analysis.  In 2020, insurance companies traded USD 63 billion in ETFs, representing a 10% growth over 2019’s trade volume. 



As of year-end 2020, U.S. insurance companies invested USD 36.9 billion in ETFs.  This represented only a tiny fraction of the USD 5.5 trillion in U.S. ETF AUM and an even smaller portion of the USD 7.2 trillion in invested assets of U.S. insurance companies.  Exhibit 1 shows the use of ETFs by U.S. insurance companies over the past 17 years.

Exhibit 1: ETF AUM Growth

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.

In 2020, ETF usage by insurance companies increased 18.4%; this is a slightly higher rate than the 16.0% increase in 2019.  The growth rate has remained consistent since 2004, when insurance companies began investing in ETFs. This growth rate implies a doubling of ETF AUM roughly every four to five years.

For the first time, we also extracted trading data filed by insurance companies.  Consistent with the numbers above, the trading analysis showed U.S. insurance companies added USD 4.1 billion to U.S. ETFs (see Exhibit 5).

Exhibit 5: ETF Net Flows

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.

Life companies had more invested assets, but P&C companies invested more in ETFs. While all three types of insurance companies grew their ETF assets, Life companies grew their ETF holdings by almost 50% in 2020 (see Exhibit 11).

Exhibit 11: ETF AUM Growth by Company Type

Source: NAIC via S&P Global Market Intelligence. Data as of Dec. 31, 2020. Chart is provided for illustrative purposes.

In 2020, insurance companies pumped almost USD 5 billion into Fixed Income ETFs, increasing the allocation to an all-time high of USD 13 billion (see Exhibit 34).

Exhibit 34: ETF AUM by Asset Class

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.

Of the USD 13 billion in Fixed Income ETFs, insurance companies designated 26.5% as SV. In the four years SV regulations have been in effect, the use of the designation has remained about 25% (see Exhibit 64).

Exhibit 64: SV Designation for Fixed Income Securities

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.


In addition to holdings data, insurance companies also filed information for all the trades they executed over the year.  For this report, we analyzed trading data back to 2015.  Over the past six years, the U.S. dollar amount of ETFs traded by insurance companies increased 234% from USD 23 billion to USD 63 billion.  This equated to a five-year CAGR of 21%.  In 2020, the amount traded increased 10% over the amount traded in 2019 (see Exhibit 76).

Exhibit 76: ETF Trades

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.

By combining the holding and trade data, we analyzed the amount of trading relative to holding.  Dividing the amount traded in a given year by the number of ETFs held at the beginning of the same year gave us a trade ratio for the year.  Insurance companies have consistently traded twice as many ETFs as they have held (see Exhibit 91).

Exhibit 91: ETF Trade Ratio

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.

In terms of asset class, insurance companies traded Fixed Income ETFs much more frequently than Equity ETFs.  The Equity trade ratio always remained under 2 times, while the Fixed Income trade ratio never dipped below 2 times (see Exhibit 93).

Exhibit 93: ETF Trade Ratio by Asset Class

Source: NAIC via S&P Global Market Intelligence.  Data as of Dec. 31, 2020.  Chart is provided for illustrative purposes.


The National Association of Insurance Commissioners (NAIC) requires all U.S. insurance companies to file an annual statement with state regulators.  This filing includes a detailed holdings list of all securities held by insurance companies.  S&P Global Market Intelligence (SPGMI) compiled this data from the NAIC and makes it available in a usable format.  From this database, we extracted all insurance ETF holdings and trades, both current and historical.  In addition, First Bridge, a CFRA Company, which is an ETF data and analytics company, provided us with a list of U.S. ETFs, as well as characteristics of each ETF—such as asset class, stock strategy, bond credit quality, etc.  We combined First Bridge ETF classifications with SPGMI statutory filing data to gain insight into how insurance companies use ETFs.

Please refer to the appendix in the full annual paper for a more detailed description of methodology.


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