Insurer ETF Usage Helps All

Continuing growth of the portion of ETF assets held by insurers could help drive down prices.

Reviewed by: Todd Rosenbluth
Edited by: Todd Rosenbluth

Although the $26 billion invested in ETFs by insurance companies at the end of 2018 remains a tiny slice of the more than $3 trillion and growing ETF pie, it’s an even smaller fraction of $6 trillion in admitted assets of U.S. insurance companies. Yet as some of the biggest insurers increased their ETF exposure last year, CFRA is encouraged that growing usage by these institutional investors will provide enhanced liquidity for all who own ETFs.

According to a newly published report “ETFs in Insurance General Accounts – 2019,” written by Raghu Ramachandran of S&P Dow Jones Indices, approximately 34% of insurance companies used ETFs in 2018. Overall, they held 372 million shares of ETFs, up 7% from the prior year, even though assets under management (AUM) dipped 3% due to declines for the underlying stock and bond markets. Ramachandran highlighted that mega companies, those with $50 billion in admitted assets, increased their ETF AUM by 39% in 2018.

For example, Liberty Mutual’s ETF AUM grew 59% to $2.7 billion, while Northwestern Mutual’s more than tripled to $1.2 billion in 2018. Also encouraging were the significant increases at mega-companies Allianz and TIAA off small ETF asset bases to $918 million and $740 million, respectively.

The usage of ETFs occurred at sizable health, life, and property and casualty insurance companies. If this ETF adoption trend continues among the biggest firms, it’ll significantly drive insurance industry assets.


Top 10 Insurance Companies Based On ETF Assets

Company Size Type 2018 AUM ($M) 1-Year Growth
Liberty Mutual Mega P&C 2,694 59.3%
USAA Mega P&C 1,616 -18.6%
NJM Insurance Large P&C 1,173 -0.7%
Northwestern Mutual Mega Life 1,150 248.3%
New York Life Mega Life 1,059 1.5%
Allianz Mega Life 918 607.1%
GuideWell Mutual Holding Corp. Large Health 894 60.1%
Allstate Corp Large P&C 773 -53.5%
Swiss Re Large P&C 766 -4.8%
TIAA Mega Life 740 476.8%

Source: National Association of Insurance Commissioners (NAIC) via S&P Global Market Intelligence. Data as of Dec. 31, 2018


The most widely held ETF by the insurance industry was the SPDR S&P 500 ETF Trust (SPY). Though SPY shed $16.5 billion in overall ETF assets in 2018, the AUM held by insurers invested in it climbed 40% to $3.1 billion.

In contrast, the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO), which respectively had $18.5 billion and $13.9 billion of overall net inflows last year, had net insurance AUM declines of 13% and 19%, to $1.8 billion and $1.1 billion. CFRA thinks the lower expense ratios of IVV and VOO are less appealing than SPY’s elevated average trading volume to mega-companies like Liberty Mutual.


ETFs Most Widely Held by Insurers

Ticker Fund Insurance ETF AUM ($M) 2018 Insurance Growth Industry Rank Overall*
SPY SPDR S&P 500 ETF 3,127 39.9% 1
LQD iShares iBoxx $ Invmt Grade Corp Bd ETF 2,922 -16.7% 32
IVV iShares Core S&P 500 ETF 1,849 -12.6% 2
VOO Vanguard S&P 500 ETF 1,072 -19.0% 4
EFA iShares MSCI EAFE ETF 795 7.3% 9
VTI Vanguard Total Stock Market ETF 722 7.2% 2
VEA Vanguard FTSE Developed Markets ETF 634 47.3% 6
HYG iShares iBoxx $ High Yield Corp Bd ETF 624 17.6% 62
IEMG iShares Core MSCI Emerging Markets ETF 624 205.3% 11
IWM iShares Russell 2000 ETF 503 11.9% 25

Source: NAIC via S&P Global Market Intelligence. Data as of Dec. 31, 2018. *Overall rank as of May 15, 2019


Relative to the ETF industry, insurance companies also favored the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) and the iShares Russell 2000 ETF (IWM). These were respectively the eighth and tenth most widely held funds among insurers, aided by asset growth, but currently are the 62nd and 25th largest ETFs based on overall ETF assets.

Yet the iShares Core MSCI Emerging Markets ETF (IEMG) saw the greatest demand among the 10 largest ETFs held as insurance AUM tripled to $624 million in 2018.

Broadening this review to the 40 most widely held ETFs by insurance companies, IEMG’s growth was the fourth largest. Topping that list was the PIMCO Enhanced Short Maturity Active ETF (MINT), which skyrocketed to $149 million, from $4.1 million in 2017.

Beyond the insurance industry, MINT was also popular, as investors sought less rate sensitive ETFs that provided a combination of safety and income. The iShares Floating Rate Bond ETF (FLOT), which nearly doubled its insurance AUM to $402 million, is another example of this trend.

Yet the approximate 50% growth of insurance ETF assets in the Vanguard Long-Term Corporate Bond ETF (VCLT) highlights that not all investors have the same view on interest rates.


Largest AUM Growth Among Top 40 ETFs

Ticker Fund Insurance AUM ($M) 2018
MINT PIMCO Enhanced Short Maturity Active ETF 149 3537%
IXUS iShares Core MSCI Total Intl Stk ETF 157 489%
EEM iShares MSCI Emerging Markets ETF 433 222%
IEMG iShares Core MSCI Emerging Markets ETF 624 205%
IWV iShares Russell 3000 ETF 188 144%
FLOT iShares Floating Rate Bond ETF 402 97%
EMB iShares JP Morgan USD Em Mkts Bd ETF 160 79%
ACWX iShares MSCI ACWI ex US ETF 222 63%
VCLT Vanguard Long-Term Corporate Bd ETF 156 49%
VEA Vanguard FTSE Developed Markets ETF 634 47%

Source: NAIC via S&P Global Market Intelligence. Data as of Dec. 31, 2018.


The iShares Core MSCI Total International Stock (IXUS), which adds Canadian exposure to developed European and Asia stocks found in other iShares international equity ETFs, was also popular. Insurance assets for IXUS swelled by five times to $157 million in 2018.

However, Ramachandran highlighted in this report that insurance companies invested only 12% in smart beta ETFs in 2018, less than the 20% of ETF assets invested in smart beta ETFs overall, and that insurers significantly pulled back from using smart beta products. Insurance assets for the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC), the iShares Edge MSCI Min Vol U.S.A. ETF (USMV) and the iShares Russell 1000 Value ETF (IWD) shrunk by more than 30% in 2018.

Overall, CFRA is encouraged by growing interest in ETFs by insurance companies, as further institutional demand will help improve the liquidity and reduce the trading costs for all investors. We think there’s significant room for further adoption, and as assets swell, expense ratios for market-cap-weighted and smart beta funds will continue to fall.

To read a copy of the report from S&P Dow Jones Indices, click the below link:

A related webinar that S&P Global is hosting, which CFRA will be speaking during, will take place May 23 at 11 a.m. Register at

Todd Rosenbluth is director of ETF and mutual fund research at CFRA, an independent research firm that acquired S&P Global Market Intelligence’s equity and fund business in October 2016. Follow him at @ToddCFRA.