US insurers clear of Russian assets pre-war, over-covered by energy

US insurers entered 2022 with less than a $1 billion in asset exposures to Russia or Ukraine and exposures to the benefitting energy sector capable of neutralising the impact many times over, a US regulatory body noted.

Exposure to Russian and Ukrainian financial assets came to a mere $842 million at end-2021, down palpably on the prior year.

Life insurers held 81% of the total or $684.7 million, ahead of P&C carriers with 17% or $138.3 million. Russian exposures constituted 93% of the total sum or $787.4 million.

“The relatively small exposure mitigates concerns over current geopolitical risks,” according to a report by the Capital Markets Bureau of the National Association of Insurance Commissioners (NAIC), which coordinates work amongst state insurance bodies.

Exposures were not evenly spread. Of the fifty-six US insurance entities holding Russian bonds, one large unnamed life company accounted for 33% of the total and the top 10 US insurers accounted for 81%.

Exposures to oil and gas companies, to-date beneficiaries of the conflict as oil prices skyrocket, are well over 100 times larger, the NAIC noted.

Securities from the oil and gas industry accounted for $102 billion on insurer asset books at end-2021, some 1.3% of invested assets. Life insurers held 76% of that exposure; P&C insurers 22% or $22.3 billion.

Secondary impact from the Russian invasion of the Ukraine will be more focused on broader macroeconomic impact.

“Ongoing turmoil resulting from Russia’s invasion of Ukraine has resulted in a negative impact on global economic growth, and it has increased inflationary pressures as world economies attempt to recover from the impacts of the COVID-19 pandemic.”

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