US Insurers have $US billions deposited in troubled banks but there are few signs the banking sector’s problems are reaching the industry, ratings agency AM Best reported today in BestWire.
AM Best said its data for 1Q23, when bank runs began, were unavailable but 4Q22 data were almost complete.
Associate director Jason Hopper said a preliminary view of 4Q22 data showed nothing to indicate or support a scenario suggesting banks began pulling back their deposits before the crisis developed.
US Clearcover Insurance Co had more than $US40m ($A60m) deposited with Silicon Valley Bank (SVB) at the end of 3Q22, before the bank imploded this month, according to the latest AM Best data.
Clearcover CEO Kyle Nakatsuji said the company’s risk management had protected it from “significant harm”.
“Our existing relationships with other systemically important banks (banks “too big to fail”) allowed us to mitigate adverse consequences related to SVB’s failure,” he told BestWire. “There was no impact or risk to the continuity of our insurance operations. ”
At the end of the quarter, AM Best data showed First American Title Insurance Co had $US3m in deposits at First Republic Bank and millions more in Signature Bank, which met its demise on March 12, two days after SVB’s.
“First American moved all the funds that could be readily moved prior to Signature going into receivership,” a spokesperson told BestWire. “A significant portion of the funds that remained were insured.”
“It does not appear that there is widespread use of or significant insurer exposure to smaller community banks,” he said.
Two carriers — AmeriHealth HMO and Vista Health Plan — topped their deposits in Credit Suisse at $250,000, the maximum insured by the Federal Deposit Insurance Corp.
AM Best senior director of industry research and public relations Sridhar Manyem said the near collapse of SVB, Signature Bank and Credit Suisse would cause insurers to examine their exposures to banks more carefully as part of their enterprise risk management process.
“A comprehensive scrutiny of all the touch points with banks and evaluating the impacts in case of run on the banks may be a part of (risk management) exercises that insurers undertake,” Manyem said.