UK life insurers made a net investment of £5.15bn ($8.02bn) in the third quarter of 2014, the highest figure since the third quarter of 2010 and following six consecutive quarters of net disinvestment.
The figures from the Office for National Statistics (ONS) also showed life insurers shifting their portfolios to short-term from longer-term assets, a trend that has been evident for several years.
Net investment in short-term assets was £3.67bn during Q3, while £2.63bn was ploughed into longer-term assets.
The leap in overall investment was not down to a huge increase in business, with the ONS reporting premiums earned for the sector at £29.1bn for the period, a slight decline on the £29.4bn for the second quarter. The surplus of income over expenditure was a solid but not spectacular £2.80bn.
Among the short-term assets that life insurers invest in, the biggest quarter-on-quarter change was in money market funds, where net investment rocketed to £2.7bn from a net disinvestment of £2.1bn the prior quarter.
In longer-term assets, life insurers continued to sell their standard UK gilts, but boosted their purchases of index-linked gilts. Investments in mutual funds (including unit trusts and hedge funds) was strong again, with flows reaching £7.5bn in the third quarter. The trend of net disinvestment of corporate bonds and equities continued from prior quarters, but generally at a lower rate than before.
The picture for general insurers was not so strong, with net investment dipping slightly to £895m from £1.08bn. Unlike their compatriots on the life side, general insurers raised their longer-term investments in assets such as gilts and foreign corporate bonds, but they also put a lot more money in the bank this quarter - £446m, compared with a net withdrawal of £1.78bn in the second quarter.