Higher returns through illiquidity premiums primary motivation for European insurers’ private asset investment

Written by Adam Cadle

30/09/2025

The primary motivation of European insurers for investing in private assets is higher returns through illiquidity premiums, Fitch Ratings latest survey has revealed.

Portfolio diversification was the second most common reason, cited by 73% of respondents. Other motivations include ESG considerations, liability matching, and access to innovative/bespoke asset structures not available in public markets. Respondents also cited hedging against market volatility and operating-capital generation.

Fitch said appetite for private credit was generally higher among life insurers and non-life and reinsurance firms with meaningful long-dated liabilities.

Private credit is still a relatively small portion of the overall financial system and does not currently pose a systemic risk to insurers, Fitch added.

Insurers’ private credit investment growth has been driven by the increase in the overall size of the private credit market. Global private assets of $1.6trn at year-end 2024 should grow 11% annually to $2.7trn by 2029, according to Preqin.

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