More non-traditional assets and higher-risk bonds
OLDWICK, N.J., September 4, 2018—In an new A.M.BestTV episode, Jennifer Asamoah, financial analyst, and Jason Hopper, associate director, industry research and analytics, both of A.M. Best, said health insurers’ investments have included more non-traditional assets and higher-risk bonds.
The make-up of the U.S. health insurers’ investment portfolio has undergone a sizeable growth over the last decade. Asamoah highlighted what has driven that growth.
“The health industry has seen a sizable growth in invested assets, averaging 8% annually with a shift to non-traditional asset classes,” said Asamoah. “The challenge of the low-interest environment has compelled many carriers to consider these non-traditional asset classes as a means to boost their overall investment income. Also, the growth trend is driven by national players, such as Kaiser, which accounted for 22% of the segment’s assets, as well as the top five carriers, which accounted for 44% in 2017.”
Improved Investment Income?
Hopper spoke about whether the shifts have resulted in improved investment income.
“Overall, gross investment income per asset has been relatively consistent. From a broader perspective, investment income as a whole has been around one-quarter of total net operating gains over the last 10 years.
Growth and investment income have moved within tandem with overall operating performance,” he said.
To access a copy of this special report, titled, “U.S. Health Insurance Companies Expanding Investment Options,” visit here.
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