U.S.-based insurance companies do not have much exposure to Russian securities, according to an S&P Global Market Intelligence analysis of regulatory statements.
|About this analysis|
Analysis limited to U.S.-based insurance companies with year-end 2021 regulatory statements submitted to the National Association of Insurance Commissioners. Excludes insurance subsidiaries domiciled outside the U.S. and its territories.
Information reflects reported stock and bond holdings within Schedule D Part 1 and may exclude other Russia-based investments reported in other sections of the regulatory statements.
Investments were determined using CUSIP numbers associated with securities of an issuing entity or ultimate parent company located in Russia.
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A review of U.S. insurers’ portfolios shows that they held $1.46 billion in Russian bonds or stocks as of year-end 2021, with 85.8% of that total invested in Russian sovereign debt. Following Russia’s invasion of Ukraine, S&P Global Ratings has placed the country’s sovereign debt into junk status.
As issuers’ credit ratings fall, the probability of bondholders not receiving interest or principal payments rises. Insurance companies must account for that risk by carrying additional surplus or capital for those investments. While some U.S. insurers may feel the effect of additional charges and potential investment losses, the overall impact looks to be minimal.
Life companies responsible for most Russian investments
In aggregate, U.S. life insurers held $1.30 billion in Russian investments as of Dec. 31, 2021, accounting for about 89% of the holdings across the entire U.S. insurance industry. Holdings in Russian sovereign debt stood at $1.14 billion; the remaining $162 million was in Russian corporate securities, bonds or common stock.
Property and casualty insurers’ total investments were $145.4 million at the end of 2021; health insurance companies held $15.6 million in Russian securities.
Northwestern Mutual tops exposure list
Northwestern Mutual Life Insurance Co. had the largest exposure to Russian securities at the end of 2021 due to it holding $414.1 million in government debt.
The U.S.-based affiliates of MetLife Inc. reported $189.3 million in Russian bonds as of Dec. 31, 2021, the second-largest aggregate reported holdings. A company spokesperson for the New York-based insurer said the holding company’s net exposure to Russian bonds is now down from the end of last year and constitutes a small fraction of its $488 billion in general account holdings.
Of note, MetLife completed the divestiture of its Russian subsidiary, Joint-Stock Co. MetLife Insurance Co., to Public Joint Stock Company Sovcombank in January 2021.
American International Group Inc. was third on the list with $142.3 million in Russian investments as of the end of 2021, followed by the affiliates of Massachusetts Mutual Life Insurance Co.
In total, 11 U.S. insurers reported more than $30 million in exposure to Russian stocks and bonds in their year-end 2021 regulatory statements.