U.S. Insurer Exposure to Russia, Ukraine, and Oil/Gas Companies Declines from 2020 to 2021

Link: https://content.naic.org/sites/default/files/capital-markets-special-reports-Russia-Ukraine-Oil-Gas-YE2021.pdf

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Total Russian and Ukraine sovereign and corporate debt was $813.3 million at year-end 2021,
representing 97% of total exposure; the remainder comprised $28.8 million in stocks (see Table 2).
While life companies accounted for the majority of the bond exposure at $683.9 million (or 84% of total
Russia and Ukraine bonds), property/casualty (P/C) companies accounted for almost all the Russia and
Ukraine stock exposure at $28 million. About 90% of U.S. insurers’ exposure to Russia and Ukraine
bonds and stocks was held by large companies, or those with more than $10 billion assets under
management.

Author(s): Jennifer Johnson, Michele Wong, Jean-Baptiste Carelus

Publication Date: 14 Apr 2022

Publication Site: NAIC Capital Markets Special Reports

Equity Market Volatility Spikes to Start 2022

Link:https://content.naic.org/sites/default/files/capital-markets-hotspot-Equity-Market-Drop-Jan-2022.pdf

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Both economic and geopolitical factors have caused some volatility in the financial markets, including a
recent significant decline in equity markets into “correction territory,” or a decrease greater than 10%.
Equity markets have been declining over the last few weeks after reaching a record high at the
beginning of 2022 when Standard & Poor’s 500 Index (S&P 500) reached almost 4,800. On Jan. 24, the
S&P 500 was down as much as 2% intraday, but it rebounded to finish the day up 0.3%. Volatility
continued into the following trading day, with the index declining 1.2% on Jan. 25.

Author(s): Jennifer Johnson, Michele Wong, and Jean-Baptiste Carelus

Publication Date:25 Jan 2022

Publication Site: NAIC Capital Markets Bureau

U.S. Insurance Industry Outsourcing to Unaffiliated Investment Managers
Unchanged From 2019 to 2020

Link:https://content.naic.org/sites/default/files/capital-markets-special-reports-IM-Outsourcing-YE2020.pdf

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The percentage of U.S. insurers that reported outsourcing investment management to an
unaffiliated firm has remained relatively unchanged at year-end 2020, compared to the last
several years; it was about half of all U.S. insurers, dating back to at least 2016.
Consistent with prior years, small insurers, or those with less than $250 million in assets under
management (AUM), accounted for the largest percentage, or 63% of the total number of U.S.
insurers, that outsourced investment management.
Property/casualty (P/C) companies continue to account for almost 60% of the total number of
U.S. insurers that outsource to unaffiliated investment managers.
For U.S. insurers that named the unaffiliated investment management firms that they utilize,
BlackRock, Conning, and New England Asset Management Inc. (NEAM) have been the top three
most-named investment managers over the last few years.

Author(s): Jennifer Johnson and Jean-Baptiste Carelus

Publication Date: 18 Jan 2022

Publication Site: NAIC Capital Markets Special Bureau

U.S. Insurance Industry’s High-Yield Bond Exposure Grows Following COVID-19-Related Credit Deterioration in 2020

Link: https://content.naic.org/sites/default/files/capital-markets-special-report-covid-related-credit-deterioration.pdf

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At year-end 2020, the U.S. insurance industry reported $286 billion in high-yield bond exposure,
an increase of just over 25% compared to year-end 2019 due in part to the broad-based credit
impact of the COVID-19 pandemic.

High-yield bonds accounted for 6.1% of the industry’s total bond exposure, the highest level in
more than 10 years and an increase from 5.1% at year-end 2019.

High-yield corporate bonds, asset-backed securities (ABS) and other structured securities, and
private-label commercial mortgage-backed securities (CMBS) were the primary contributors to
the increase in high-yield exposure.

Author(s): Michele Wong and Jean-Baptiste Carelus

Publication Date: 6 August 2021

Publication Site: NAIC, Capital Markets Special Report