Exchange-traded fund assets held in U.S. insurance companies' general accounts fell by 23.5% in 2022, the first "substantial drop" in ETF assets since insurers began buying ETFs in 2004, an S&P Dow Jones Indices report issued Wednesday said.
ETF assets held by insurers totaled $36.6 billion at the end of 2022, down $11.2 billion from about $47.8 billion at the end of 2021, according to S&P Dow Jones Indices' eighth annual study of ETF usage in U.S. insurance general accounts. The report was authored by Raghu Ramachandran, head of insurance asset channel at S&P Dow Jones Indices.
The biggest percentage decline prior to last year occurred in 2011, when ETF assets in insurance company general accounts fell by 12.7%, Mr. Ramachandran said Thursday in comments provided via a spokeswoman. That, however, represented a decline of just $1.2 billion.
Analyzing last year's drop in ETF assets is complicated by two factors, the report said. The first is the unusual bear market of 2022, where both equity and fixed income markets saw sharp declines. The S&P 500 index dropped 19.4% and the S&P U.S. Investment Grade Corporate Bond Index was down 14.3%, the report said.
Insurers withdrew $4.1 billion from ETFs in 2022, so valuation declines explain about two-thirds of the AUM drop, the report said. Also in 2022, two "Mega insurers" opted to exit all public equities, including ETFs. That represented $3.5 billion of the $4.1 billion in withdrawals.
When those two companies — which the report did not identify — are excluded from the analysis, insurer ETF AUM dropped by 16.5%, or in line with market results, the report said.
