Board of Governors of the Federal Reserve System

Figure 1. Life insurers’ cash holdings: Sum of net cash, cash equivalents, and short-term assets

Figure 1 is a single line chart that depicts the life insurers’ cash holdings. The x-axis is depicted in years and spans from 2006 to 2023. The y-axis is in billions of USD and ranges from 25 to 225. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. The series ranges from 75 to 220. There are clear increasing trends following the financial crisis and during the pandemic, reaching a peak of 160. The highest point in the series is the start of the pandemic where it reaches 220 billion.

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Figure 2. Components of the net change in cash for the life insurance industry

Figure 2 is a line chart that depicts components of the net change in cash for the life insurance industry. There are four series depicted in this chart. The dark solid line is the net change in cash. The dashed line is the operations. The dotted line is investments. The dotted and dashed line is financing and miscellaneous. The x-axis is shown in years and spans from 2006 to 2023. The y-axis is in billions of USD and it ranges from -50 to 100. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at 0. Investments stay below zero for the whole period. Financing and miscellaneous hovers just below the zero mark for the most of the period. Operations ranges from 25 to 50 for the whole period. Net change in cash stays close to zero except for large increases during the financial crisis and the start of the pandemic. During the great financial crisis, it grows to close to 50 and it reaches its highest point during the pandemic at just below 100.

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Figure 3. Components of total cash flow from financing and miscellaneous sources

Figure 3 is a line chart that depicts the components of total cash flow from financing and miscellaneous sources. This chart depicts four different series. The solid line is the financing and miscellaneous. The dashed line is borrowed funds. The dotted line is net deposits. The dotted and dashed line is other cash provided. The x-axis is shown in years and spans from 2006 to 2023. The y-axis is in billions of USD. It ranges from -25 to 75. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at 0. Net deposits stay below zero for the whole period. Borrowed funds hovers near or below zero for the entire period. The other cash provided stays near zero for the entire period. Financing and miscellaneous is often below zero except for a sharp increase in the pandemic period where it approaches 70.

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Figure 4. Federal Home Loan Bank (FHLB) advances to U.S. life insurers collateralized by funding agreements

Figure 4 has two panels. Panel A shows the quarterly change. Panel B shows the level. Figure 4-Panel A is a single line chart that depicts the FHLB advances to U.S. life insurers collateralized by funding agreements. The x-axis is depicted in years, and it ranges from 2007-2021. The y-axis is in billions of USD. It ranges from -5 to 20. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at zero. The FHLB advances hover near zero for most of the period with a sharp increase toward the end of the financial crisis and the start of the pandemic. The highest part approaches 20 billion at the end of the financial crisis and the start of the pandemic period.

Figure 4-Panel B is a bar chart that depicts the levels of the FHLB advances to U.S. life insurers collateralized by funding agreements. The x-axis is depicted in years, and it ranges from 2007-2021. The y-axis is in billions of USD. It ranges from 0 to 120. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. The levels of the FHLB advances steadily increase throughout the period. There is a significant jump at the end of the financial crisis and the start of the pandemic.

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Figure 5. Life insurers’ net cash collateral received as variation margin on derivative contracts

Figure 5 is a line chart depicting the life insurers’ net cash collateral received as variation margin on derivative contracts. This chart has two series. The solid line depicts market yield on U.S. Treasury securities at 10-year constant maturity (1,000 basis points). The dotted line depicts the net change in fair value of collateral (billions of dollars). The x-axis is depicted in years, and ranges from 2013-2021. The y-axis depicts both the 1,000 basis points and billions of dollars. It ranges from 0 to 40. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at zero. The market yield starts at 20 and increase to 30 in 2019. Then decreases to below 10 by the end of the period. The net change hovers near zero for most of the period. There are increases in 2016 and the pandemic period.

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Figure 6a. Transactions of bonds rated triple A and double A by quarter in the life insurance industry

Figure 6a is a line chart that depicts the transactions of bonds rated triple A and double A by quarter in the life insurance industry. This is a line chart that depicts two series. The solid line is the sales and the dotted in line is net position. The x-axis is years, and it ranges from 2006 to 2021. The y-axis is in billions of US dollars, and it ranges from -20 to 40. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008: Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at zero. The net position shows a lot of volatility throughout the entire period. The net position ranges from -4 to 40. It reaches its highest point in 2010. The sales remain above the net position for the entire period. It trends from 10 to 20. It also shows a lot of volatility but follows a similar pattern to the net position.

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Figure 6b. Treasury transactions by quarter in the life insurance industry

Figure 6b is a line chart that depicts the treasury transactions by quarter in the life insurance industry. This is a line chart that depicts two series. The solid line is the sales and the dotted in line is net position. The x-axis is years, and it ranges from 2006 to 2021. The y-axis is in billions of US dollars, and it ranges from -20 to 40. There are two shaded regions that indicate periods of stress for life insurers (2007:Q2—2008:Q4 and 2020:Q1—2020:Q2). The first period is the financial crisis and the second is the start of the pandemic. There is a red horizontal line at zero. The two series are like Figure 6a. Both series show a lot of volatility throughout the period. Net position ranges from -10 to 10. The sales ranges from 15 to 30. Sales is generally higher than the net position.

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Figure 7. Treasury holdings flagged as pledged to counterparties

Figure 7 is a stacked bar chart that depicts the treasury holdings flagged to counterparties. On top of the stacked bar chart, there is a line chart that depicts percent of assets. The following series are part of the stacked bar chart: collateral, multiple, on loan/leases, other, repo, state deposits, and not pledged. The x-axis is depicted in years, and it ranges from 2005 to 2021. There are two y-axes. The far-left y-axis is billions of dollars, and it ranges from 0 to 200. The far-right y-axis is percent of assets. It ranges from 0 to 5. The percent of assets ranges from 1.5 to 4.5. It has its lowest point in 2007 at 1.5 and steadily increases through 2010 and reaches its peak at 4.5. It stays level till it decreases in 2006. It ends in 2021 at 3.5. For all categories of the stacked bar chart, the lowest point is in 2007 and the highest point in 2016 and 2017. After 2017, there is a slight decline and remains level to the end of the period.

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