91% of global insurers plan to increase investments in private assets

Written by Adam Cadle

15/10/2024

Ninety-one per cent of global insurers intend to increase investments in private assets over the next two years, particularly across multiple private debt categories, including opportunistic private debt (41%), private placements (40%), and direct lending (39%).

BlackRock’s Global Insurance Report 2024 revealed the 91% figure increases to 96% for APAC and 96% for North American insurers.

Within public markets, 42% of those surveyed plan to increase allocations to government and agency bonds. Inflation-linked bonds are also a priority, with 33% planning to increase exposure, given nearly half of insurers (46%) identify inflation as a major macro risk. Additionally, 44% of respondents are looking to increase their allocations to cash and short-term instruments for liquidity.

Mark Erickson, global head of BlackRock’s Financial Institutions Group, said: “We’ve seen rapidly accelerated demand for private markets among insurers in recent years, given these investments’ dual benefits of diversification and increased income generation.”

Furthermore, 60% of global insurers are now targeting clean energy infrastructure investments for low-carbon transition objectives, with wind and solar and technologies, including batteries and energy storage, identified as the top two thematic areas that insurers plan to target. Respondents said they see value in technology for key challenges of private asset modelling (53%) and regulatory capital integration (51%).

In terms of navigating risk, insurers see political uncertainty impacting macro risks, citing regulatory developments (68%) and rising geopolitical tension and fragmentation (61%) as their top concerns. Additionally, interest rate risk (69%) and liquidity risk (52%) were highlighted as the most serious market risks for insurers. Despite this outlook, 74% of insurers have no plans to change their current risk profiles. Notably, many insurers reported they benefit from partnerships to augment their internal expertise for risk evaluation as well as portfolio construction. According to 40% of survey respondents, an investment partner who understands both their insurance business and its operating model is fundamental to the success of insurers’ strategic priorities.

This year’s survey conducted in July – September 2024 encapsulates the views of 410 senior industry executives in 32 markets with the following regional distribution: 42% from EMEA, 29% from Asia-Pacific, 19% from North America, and 10% from Latin America. Taken together these companies represent investable assets of approximately US$27trn.

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