Insurers Eye Private Assets as Capital Rises
A recent study by Ortec Finance reveals that global insurers are on the verge of significantly increasing their allocations to private assets, driven by anticipated capital growth and a desire for diversification. The research, which surveyed 100 senior executives in insurance asset management, found that 77% expect an increase in investable capital over the next year, while only 2% foresee a decline.
The survey, covering investment managers responsible for approximately $10.48 trillion in assets, highlights a strong appetite for private debt, with two-thirds of respondents identifying it as the asset class likely to see the largest percentage increase in allocation. Private equity and real estate also feature prominently, showing substantial anticipated growth. The primary motivators for investing in private assets include inflation protection (35%), diversification (30%), cashflow matching (22%), and returns/illiquidity premiums (13%).
The study also indicates that 62% of respondents expect higher distributions from private equity in the future. However, concerns persist regarding transparency and reporting standards among private fund managers. Over 21% of respondents strongly agreed that inadequate transparency hinders insurers from investing in certain private funds due to regulatory compliance issues, while 79% slightly agreed with this sentiment.
The asset classes expected to see the biggest increase in allocations over the next 12 months are:
- Private debt (68%)
- Private equity (49%)
- Private real estate/REITS (47%)
- Real estate debt (46%)
- Infrastructure equity (41%)
“The study highlights continued momentum behind private asset allocation,” said Hamish Bailey, Managing Director UK and Head of Insurance and Investment at Ortec Finance. “The motivation is driven by the search for inflation protection in real-world assets, diversification benefits, and a long-term focus.” Bailey also acknowledged the challenges, noting that “transparency and reporting remain key barriers. Without robust data and disclosures from private fund managers, many insurers face regulatory hurdles limiting their ability to fully capitalize on these opportunities.”
As the insurance industry continues to navigate the evolving landscape of private asset investment, addressing these concerns will be crucial to unlocking further growth in this sector.
