INTRODUCTION
Over the first three quarters of 2021, U.S. insurance companies traded almost USD 48 billion in ETFs. The amount traded increased in each quarter. After a sluggish second quarter, insurance companies resumed buying Fixed Income ETFs in the third quarter. However, they continued to exit Equity ETFs. Over the three quarters, insurance companies added USD 2.6 billion into ETFs. In this report, we analyze these trades and explore the differences of insurance ETF usage over the first three quarters of 2021.
ETF TRADES
In the third quarter, insurance companies traded USD 16.5 billion in ETFs; this was 56% larger than the USD 10.6 billion they traded in the third quarter of 2020. However, trading was 3% lower YTD than in 2020, mostly because of the unusually large volume of trading in the first quarter of 2020.
As seen before, trading volume was not uniform throughout the Q3 2021 period. Trading by insurance companies was fairly subdued in the beginning of the third quarter but picked up toward the end (see Exhibit 1).
While overall trading was split evenly between Fixed Income and Equity, companies exhibited significantly different behaviors in each quarter. They traded evenly in the first quarter, more Fixed Income in the second, and more Equity in the third (see Exhibit 2).
