Only 208 US insurance companies, or 5%, of active insurance companies have so far chosen to employ derivatives, according to the capital markets bureau of the National Association of Insurance Commissioners (NAIC). And the usage overwhelmingly (94%) remains hedging, not speculation.
Insurers with derivatives exposure tend to be larger and account for 64%, or $3.69trn, of the industry's total $5.76trn in assets, based on 31 December 2014 figures.
The total notional amount of insurance industry derivative positions in 2014 increased 8.6% over year-end 2013 to $2.02trn. Life insurers were by far the heaviest derivatives users, accounting for about 94% of notional value, followed by P/C insurers with about 6%.
Swaps accounted for the largest share (49%) of total industry notional value, followed by options (45%), futures (3%) and forwards (3%). Swaps exposure increased 13.1% in 2014, while options total notional exposure grew only 3.4%.
