The Increasing Use of ETFs by Insurance Companies

July 22, 2019 — Last September, we posted a note highlighting the overwhelmingly positive motivation for considering the use of exchange traded funds (ETFs) by insurance companies as a complement to their existing investment portfolio. In short, insurance companies could realize capital efficiencies, reduce balance sheet volatility, foster greater diversification, enhance yield profiles, build competitive advantages, and obtain cost-effective delivery. Today, each of these reasons for considering the use of ETFs is of even greater importance, as we have now entered yet another low-yielding environment where the pressure on insurance investment staffs to efficiently capture incremental yield and add more to the bottom line will remain paramount.