Life Insurers Increased Currency Swap Exposure in 2018: NAIC

January 1, 2020 by Allison Bell

The National Association of Insurance Commissioners’ Capital Markets Bureau has published a new report on U.S. life insurers’ use of a complicated investment risk management tool: derivatives.

U.S. life insurers ended 2018 with $2.3 trillion in exposure to derivatives, up 8.8% from the 2017 total, according to the bureau.

• Interest rate swap exposure increased 7.4%, to $968 billion.
• Currency exchange swap exposure 26%, to $126 billion.

Life insurers were also heavy users of options tied to stock prices and interest rates.

• Equity option exposure increased 12%, to $693 billion.
• Interest rate option exposure increased 18%, to $343 billion.

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Originally Posted at ThinkAdvisor on December 31, 2019 by Allison Bell.