Insurers Seek Private Market Exposure, Take More Risk in Portfolios

Insurance companies are interested in taking more risk in their portfolios, according to the latest Conning Inc. survey of investment decisionmakers at property and casualty insurers and life insurers, released Tuesday.

The survey of 310 insurance investment executives, conducted in November 2024, solicited insurers’ top-of-mind concerns, approaches to asset allocation, and overall views on markets and investment risk.

“2024 was a relatively positive year for the market,” says Matt Reilly, Conning’s head of insurance solutions and author of the report summarizing the survey’s findings. “Insurers have shown an increased willingness to take risk in their portfolio.”

Private Assets 

Insurers over the past few years have increasingly increased their allocations to private market assets. 

“Our survey results continue to show an interest in insurers looking at private assets to be a part of their portfolio,” Reilly says. “That’s a trend that we’ve been seeing over the past several years.”

The survey found that cohorts representing approximately 10% of respondents reported having between 0% and 5% of their portfolios in private assets. This number was up from 6% in last year’s survey and is projected to shrink back down to 6% in the next two years as early adopters increase their allocations out of that range.

Cohorts that already have larger alts allocations reported they expect to increase them, according to the survey. The 12% of respondents who reported having 20% to 25% of their assets in private markets could nearly double to 21%.  Approximately 7% of respondents said their company held 25% or more of its assets in alts. Over the next two years, this cohort is expected to grow, also to 21% of the total.

“If we’re talking to a [property and casualty investor] that maybe, a couple of years ago, had no allocation to, say, private placements or private credit or real estate, maybe now [they have worked] that allocation up to 5% or 8% of their portfolio, and maybe they’re now thinking how to make it 8% to 10% over the next couple of years,” Reilly says.

Annuity and life insurers, on the other hand, tend to have longer duration, allowing for even more allocation to private markets.

“Whereas on the life and annuity side, those allocations have been much higher for much longer,” Reilly says. “We’re seeing companies that are thinking, ‘OK, we’re at 15%, 20%, 25%; how do we add the next 5%, 10%, 15% to those allocations?’”

Insurers reported their portfolios have the right amount of liquidity, and they generally did not list liquidity as a top concern when employing private market strategies. Property and casualty insurers, with shorter-term cash-flow needs, have been less likely to adopt private markets allocations, but even they are looking to increase them in a mindful manner, Reilly says.

“We’ve seen insurers [that] feel confident that their portfolio has the right amount of liquidity,” Reilly says. “They think that they are well positioned to support their insurance operations with the cash flows coming off their portfolios but are definitely mindful of it when they’re thinking about their overall private allocation.”

Investment Concerns

As in 2023’s survey, insurance investors are optimistic about the overall market, although slightly less than last year: In the 2024 survey, 77% of insurers reported being optimistic, down from 80% last year.

Insurers’ most significant concern for the coming year was the domestic political environment, while inflation took a backseat. In recent insurance surveys, inflation had been ranked as insurers’ top concern, but it fell to seventh place for 2025.

In addition to the domestic political environment, respondents ranked their top concerns as follows: investment returns/yield, market volatility, geopolitical events, impact of artificial intelligence/model risk, changes in investment-related regulations, inflation, impact of fiscal policy, impact of monetary policy and liquidity risk.

Insurers reported being keen to take on more risk, with 59% of survey respondents saying they anticipate their firms will do just that this year. Approximately 19% said their firms’ investment risk will stay the same, while 22% said risk levels will decrease.

Outsourcing Investments 

Insurers are also increasingly using external managers to manage insurance assets and for other tasks, like asset allocation and risk management.

Those surveyed reported multiple reasons for outsourcing. Approximately 56% said outsourcing some or all of their investing was a cost-saving decision. A similar share, 55%, cited the need for outside expertise for risk management or strategic asset allocation. Half of respondents said external managers were needed for their expertise in a particular investment strategy, while 38% said they relied on a consultant for a recommendation, and 28% reported that outsourcing provides better access to investment strategies.