U.S. Life Insurers' Mortgage Exposure Continues to Grow

By Allison Bell

News May 09, 2023 at 03:12 PM

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Portfolios at U.S. life insurers tilted more toward mortgage investments, and away from bonds, in 2022, according to new data from the National Association of Insurance Commissioners' Capital Markets Bureau.

Life insurers ended the year with $5.3 trillion in cash and invested assets, up 2.9% from the total at the end of 2021.

Life insurers' mortgage assets increased 8.5%, to $695 billion. The share of life insurers' assets invested in mortgages increased to 13.1%, from 12.4%.

What It Means

Trends in the U.S. mortgage market could affect the strength of the insurers backing clients' life insurance policies, disability insurance policies and annuities.

Mortgages tend to have higher yields than bonds, but they can be harder to sell, and their prices change more, according to the Capital Markets Bureau analysts.

More Numbers

Life insurers' holdings of bonds increased 2.4%, to $3.6 trillion. The share of the portfolios invested in bonds fell in 2022, to 68.3%, from 68.6%.

Because of regulator rules, life insurers focus more on investing in bonds than on investing in stock, but they do have some stock. The value of life insurers' investments in common stock fell 5.6%, to $211 billion.

(Image: Andrii Yalanskyi/Adobe Stock)

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