Berkshire's P&C units lead the way as insurers up short-term investments

Property and casualty units of Berkshire Hathaway Inc. have led the charge into short-term investments seen across the US insurance industry over the past two years, according to an S&P Global Market Intelligence analysis.

As of Dec. 31, 2023, Berkshire's property and casualty (P&C) units grew their short-term investments by approximately $41 billion from the end of 2021 as interest rates moved higher.

Berkshire's life insurance subsidiaries were the next most active group, increasing their short-term investments by more than $4 billion — a rise of over 200%.

In its latest filing, Berkshire attributed its high investment performance to higher short-term interest rates and added that it plans to maintain ample liquidity and ensure safety over yield in terms of its short-term investments.

Other insurers have also increased their short-term investments by a significant margin since the end of 2021, with six experiencing growth of $1 billion or more as of year-end 2023.

Life insurers The Northwestern Mutual Life Insurance Co. and Brookfield Reinsurance Ltd. had the highest percentage change from 2021 to year-end 2023, raising their short-term investments by 1,782.8% and 2,003.5%, respectively. Northwestern's short-term investments increased from just over $155 million in 2021 to nearly $3 billion as of Dec. 31, 2023, while Brookfield increased its holdings to $2.32 billion from approximately $110 million.

Ten of the 11 top insurers by change in total short-term investments were classified as life insurance filers. This includes the statutory life groups such as Jackson Financial Inc., Allianz SE and Symetra Life Insurance Co., which held marginal short-term investments in 2021 but then increased these assets to $1.12 billion, $612.7 million and $600.5 million, respectively.

This analysis is limited to select P&C and life insurers with a change in net short-term investment assets from Dec. 31, 2021, to Dec. 31, 2023, of more than $500 million. The industry documents linked below include P&C and life insurers with a change in net short-term investments of at least $100 million. The last chart in this article is limited to P&C and life companies with net short-term investments of at least $100 million as of Dec. 31, 2023.

Data is sourced from the assets page within the life and property/casualty statements filed with the National Association of Insurance Commissioners. Short-term investments as defined by the NAIC include bonds; mortgage loans; other short-term investment assets; and investments in parent, subsidiaries and affiliates in which maturities or repurchase dates at the time of acquisition were one year or less.

Berkshire's short-term investments peak

Berkshire Hathaway's P&C subsidiaries increased their short-term investments in the second half of 2023, with the total investment carrying value exceeding $80 billion at the end of September and December. These two instances mark the first time that Berkshire's P&C subsidiaries short-term investment assets exceeded $80 billion.

In total, the insurer's cash, cash equivalents and short-term investments grew by 46.6% year over year at the end of 2023.

– Download the previous chart for P&C insurers. – Download the previous chart for life insurers. – Read the interactive 2023 US Insurance Investments Market Report.

Concentration levels

Among insurers with investable assets greater than $100 million, Berkshire Hathaway's life insurance units had the highest concentration of invested assets within short-term investments. About 22% of the insurer's investable assets were in short-term investments as of Dec. 31, 2023, an increase of 2.2 percentage points from the end of the previous year. For the insurer's P&C companies, the short-term investments constituted 17% of its investable assets.

HCI Group Inc.'s P&C subsidiaries came second, with short-term investments amounting to 21.0% of its total investable assets, despite a significant decrease from the 39.2% concentration in short-term investments at the end of the prior year.