The equity markets hit record levels in May, with the S&P 500 up more than 7% quarter-to-date. If performance holds for the quarter, based on analysis of FactSet data covering five years of AUM changes for three industry leaders—Prudential, Equitable, and Hartford—higher AUM should lift 2Q earnings for insurance companies that derive earnings from investment income and fee income. The link between AUM and these two income streams is described in more detail below.
Analysis of quarterly AUM roll forwards for Prudential, Equitable, and Hartford confirms the S&P 500 return is a reliable directional signal for AUM change. And the data goes further: If the S&P 500 finishes 2Q26 in the +5% to +8% range, historical patterns indicate total AUM growth could be approximately +2.5% to +4.5% for the quarter. The paragraphs below explain the mechanics behind the relationship between AUM and earnings.
The relationship between AUM and earnings translates through two forms of income: fee income and investment income. On the fee income side, the connection is direct. Asset management fees, separate account charges, and variable product fees are all calculated as a percentage of AUM, so as AUM increases—whether driven by market appreciation or net client inflows—it translates directly into higher fee revenue.
On the investment income side, insurance companies invest the premiums and reserves they collect in a diversified portfolio of securities. The investment income earned on this portfolio is a function of the yield on the assets and the size of the asset base. As AUM grows, the base expands and investment income increases. For the three sample companies, AUM growth in the +2.5% to +4.5% range would imply an increase of roughly $67 billion to $121 billion in AUM, which would translate into a meaningful lift in fee and investment income and lift 2Q26 earnings for these companies and, more broadly, for any insurer that derives earnings from the assets it manages.
The table below presents AUM roll forward data for PRU, EQH, and HIG from 2Q21 through 1Q26, which includes net change in AUM that can be compared to the similar change in the S&P.
Market Performance Data: Impacts Investment Income (positive)
The advancing equity markets are a positive for the earnings of life insurers and annuity writers through higher fee income, stronger separate account values, and expanded realized gain opportunities across investment portfolios.
Employment Data (NFP, Unemployment, Claims): Impacts Premiums (positive)
(Feb 2026 revised downward 5/8)
Inflation Data: Impact on Claims Costs (negative)
CPI Headline 3.3 to 3.8
CPI core 2.6 to 2.8
PCE Headline 2.8 to 3.5
PCE Core 3.0 to 3.2
Two measurements of inflation, headline CPI and core PCE, continued to increase to 3.8% and 3.2%, respectively. Increases in Core PPI signals continued input cost pressure on construction and repair for insurance companies, which compresses underwriting margins and reinforces the need for insurers to be diligent about accelerating rate filings and tightening terms in affected lines.
Two Sources of Inflation
Tarif-driven (negative): We have written about the negative impact that tariff-driven inflation has on claims’ costs. Higher costs for auto parts and lumber attributed to tariffs, for example, push up the cost to settle policyholder claims, which drives up loss ratios and drives down earnings.
Energy-driven (potential positive): We have also written that the most recent source of inflation, higher fuel costs, may actually lower claim costs for companies focused on writing auto insurance. (Gas Prices, Benefit Ratios, and Inflation) We also made the case that a sustained increase in the price of gasoline may change driving habits, such as increases in work from home or carpooling, to reduce miles driven.
The tables on the following pages can be accessed from the Company/Security tab in the FactSet Workstation by selecting “Sector Intelligence” and “Assets Under Management,” as shown below. The number of companies with Assets Under Management data is being expanded, and the data available from company to company varies based on disclosure.
Equitable: Company/Security - Assets Under Management - EQH-US - FactSet
Hartford: Company/Security - Assets Under Management - HIG-US
Prudential: Company/Security - Assets Under Management - FactSet
Our Macro Tracker table lists key economic data relevant to insurance company earnings. The right-hand column ties macro trends to the potential impact on company earnings.
Macro Tracker
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