In 2021, U.S. insurance companies added USD 1.5 billion in exchange-traded funds (ETFs) to their general account portfolios. By year-end 2021, U.S. insurers increased their ETF AUM by 15% from 2020. This 2021 growth was in line with long-term trends; in the 18 years since 2004, insurance companies have increased their ETF AUM by 15% annually. Historically, insurance companies have invested in Equity ETFs even though the majority of their assets are in Fixed Income securities, and Equity ETFs still dominate insurance ETF holdings. However, with the increasing acceptance of Fixed Income ETFs, we saw a significant increase in flows into these ETFs from insurance companies. Indeed, in 2021, insurance companies added to Fixed Income ETFs while removing funds from Equity ETFs. In our seventh annual study of ETF usage in U.S. insurance general accounts, we also analyzed the trading of ETFs by insurance companies. On average, insurance companies traded twice as many ETFs during the year as they held at the beginning of the year. Overall, 2021 trade volume was relatively flat compared with 2020. This was primarily because intra-year turnover declined by 24%.
As of year-end 2021, U.S. insurance companies invested USD 45.4 billion in ETFs. This represented only a fraction of the USD 7.2 trillion in U.S. ETF AUM and an even smaller portion of the USD 7.8 trillion in invested assets of U.S. insurance companies. Exhibit 1 shows the growth of ETFs by U.S. insurance companies over the past 18 years