As inflation remains stubbornly high, insurers managing over $14 trillion in assets are overhauling investment strategies to protect portfolios. A recent Goldman Sachs survey of 405 insurers reveals that 52% now rank inflation as their top macroeconomic risk, up from 42% in 2024 . In response, firms are flocking to private credit, infrastructure debt, and equities—a move reshaping the insurance asset management landscape. Here’s what’s driving this shift and how it could impact markets.
The Inflation Hedge: Where Insurers Are Investing Now
1. Private Credit (58% of Insurers Increasing Allocations)
Private credit—loans to mid-market companies or projects—offers yields of 8–12%, far outpacing traditional bonds. Insurers like MetLife and AIG are targeting this asset class for:
- Inflation-adjusted returns: Loans often include floating rates tied to benchmarks like SOFR.
- Portfolio diversification: Reduces reliance on volatile public markets.
2. Infrastructure Debt (36%)
Investments in roads, renewable energy, and telecom projects provide:
- Stable cash flows: Long-term contracts with governments or corporations.
- Inflation linkage: Revenue streams tied to CPI adjustments.
3. Private Equity (55%) & US Equities (57%)
Despite market uncertainty, insurers favor:
- PE’s illiquidity premium: Returns averaging 10–15% over public equities .
- Tech and healthcare stocks: Seen as resilient to inflationary pressures.
Why Inflation Is Driving the Change
| Factor | Impact on Insurers |
|---|---|
| Rising Claims Costs | Higher payouts for property, health insurance claims, and auto claims. |
| Low-Yield Bonds | 10-Year Treasury yields (4.2% in March 2025) lag behind inflation (3.9%). |
| Regulatory Pressures | Solvency II and NAIC require capital buffers against inflation volatility. |
Source: Goldman Sachs’ 2025 Global Insurance Survey
The Risks and Rewards of Private Assets
Pros
- Higher returns: Private credit delivers 3–5x the yield of corporate bonds.
- Inflation protection: Infrastructure and real estate often include CPI-based escalators.
- Portfolio stability: Less correlation to stock market swings.
Cons
- Liquidity risk: Private assets are hard to sell quickly.
- Due diligence costs: Assessing private deals requires specialized teams.
- Regulatory scrutiny: Basel III reforms may limit exposure.
Goldman Sachs Survey: Key Findings
- Top 3 Asset Classes for 2025:
- Private credit (58%)
- US equities (57%)
- Private equity (55%)
- 10-Year Treasury Outlook: 78% expect yields to stabilize at 4–5%, easing pressure on fixed-income portfolios.
- Geographic Focus: 63% favor North America for private investments due to “economic resilience.”
What This Means for Investors and Policyholders
- Higher premiums: Insurers may pass on alternative asset management costs to customers.
- Market volatility: Large-scale shifts could disrupt public equity and bond markets.
- Opportunities: Retail investors can access private assets via insurance-linked securities (ILS) or ETFs like BLK’s iShares Private Markets ETF.
Low-Competition Keywords to Target
- “Insurers private credit allocation trends”
- “Infrastructure debt inflation hedge”
- “Insurance asset management 2025”
- “Best private equity for insurers”
Expert Predictions for 2025–2030
- BlackRock: Private credit AUM in insurance portfolios will grow to **2Tby2030∗∗(upfrom2Tby2030∗∗(upfrom800B in 2024) .
- McKinsey: 70% of insurers will use AI to optimize private asset selection by 2026.
By pivoting to private assets, insurers aim to balance inflation risks and returns—a strategy with ripple effects across global markets. For more insights, explore our [Guide to Inflation-Proof Investments] or compare [Top-Performing Insurance ETFs].
Have questions? Share your thoughts on private asset strategies in the comments below! For more on insurance basics, check out our Health Insurance Explained guide.
