August 14, 2026
By Matthew Vegari, Head of Research
While hardly smooth sailing in 2026, the epic, multiyear run for equities marches ahead. Through August 10, the S&P 500’s trailing three-year annualized return (ex. dividends) was 20%. Amid supersized gains and whipsawing narratives—AI buildouts, an energy shock, SaaSpocalypse—the Research Desk sought to investigate how, if at all, US insurers have shifted their equity strategies.
This brief leverages Clearwater’s proprietary database and focuses on two sectors that have seen cyclical highs of late: semiconductors and energy. The former is riding a positive demand shock, powered by the ceaseless AI buildout; the latter is the upshot of a negative supply shock, precipitated by the ongoing conflict in the Middle East. Have insurers doubled down on either move, and if so, does a pattern in their behavior emerge? Do insurers, like many institutional investors, herd capital?
Semiconductors entered 2026 riding one of the sector’s best stretches in years, and the rally didn’t slow: the VanEck Semiconductor ETF is up +53% year to date and includes favorites like Nvidia, TSMC, and Broadcom. Energy’s run, while not quite as strong, has been propelled by Brent crude’s climb amid the standoff over the Strait of Hormuz; the Energy Select Sector SPDR is up +35% YTD.
As the two sectors outperform, have insurers tilted in their direction? A qualified yes. Market value of holdings for both are up 50% and 30% for chips and energy, respectively (mirroring overall price appreciation). But that tells us little about increases in exposure. When looking at book value, which reflects the actual cost basis of shares bought and sold—stripped of price appreciation—the stories quickly diverge.
Semiconductor book value is up 54% this year, evidence of real buying beyond the price rally. Energy book value, by contrast, has grown just 14%—still positive but a fraction of the pace. Some of this reflects gains being captured in both sectors, not just new capital to deploy. But the scale of the increase in book value for chip stocks has meant that exposure continues to climb. Meanwhile, despite the strong rally, insurers have been trimming overall exposure to energy even as they buy modestly.
The median allocation figures make the point plainly. At the end of 2025, energy accounted for 2.3% of insurers’ equity portfolios, versus 1.4% for semiconductors. Through July, energy’s share had slipped to 1.8%, while semiconductors climbed to 1.7%. This pattern has been building for a few years, but it’s notable that it’s actually accelerating in 2026, despite energy’s strong gains. An energy rally like this might arrest, or even reverse, the decline in exposure. It hasn’t. Insurers want chip stocks instead.
Purchases of both sectors have climbed since the start of 2025 but at very different speeds. Semiconductor buying began climbing in earnest in the third quarter of 2025 and hasn’t let up since, peaking in 2026 at roughly triple its January 2, 2025 baseline. Energy purchases have risen too, doubling at their 2026 peak (a real increase but a far more modest one).
On the above evidence, insurers herd selectively. Both chip and energy trades have delivered strong returns this year, but insurers have treated them nothing alike. That’s not indifference to price; it’s a bet that the AI story has more staying power than the energy story. It’s worth remembering that insurers often outsource their equity books to asset managers while keeping fixed income in-house; many of these trades are driven not by insurers themselves but by the separately managed account (SMA) managers running books on their behalf.
Their actions may prove the right call. But a cyclical investment like chips is still a wager, not a hedge, and it leaves insurers more exposed to an already-crowded trade. (Remember: insurers doubled down on the AI trade in 2025, as noted in our 2026 outlook.)
As for energy, the wager runs in reverse: insurers have trimmed their exposure to a conflict that continues to drag on and could keep paying off for those still well positioned.
This research was featured in The Wall Street Journal on August 14.
Additional research by Tyler Busby, Data Scientist
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