FHLB Borrowings Increase for Life and Annuity Insurers in 2025

A recent report by AM Best reveals a 10% increase in borrowings from the Federal Home Loan Banks (FHLBs) by U.S. life and annuity insurers in 2025, driven primarily by funding agreements. The FHLBs, composed of 11 government-sponsored banks, provide essential liquidity aimed at supporting housing and community objectives. Insurers gain access to these resources by engaging in mortgage lending and purchasing FHLB stock, while adhering to the necessary collateral requirements for advances.

The report, titled "Funding Agreements Drive FHLB Borrowings for the L/A Industry in 2025," indicates that borrowings through these agreements surged to $153 billion from $136 billion the previous year. This growth reflects the favorable borrowing costs offered by the FHLBs, which enable annuity writers to secure more advantageous investment spreads. However, it's important to consider the potential exposure to credit, collateral, and market risks that these borrowings entail.

Further, the report underscores an 18% expansion in borrowing capacity during 2025, spurred by increased activity among annuity writers. According to Jason Hopper, Associate Director of Industry Research and Analytics, "Borrowing capacity is still broadly available, although somewhat more limited than in 2019." Notably, while two-thirds of companies utilized less than half of their borrowing capacity in 2025, this marks an increase from 62% in 2019, with more companies having outstanding borrowings compared to that year.

For further details, interested parties can find the comprehensive report on the AM Best website.