Private markets assets managed on behalf of insurers have more than doubled in the past five years, according to research by Clearwater Analytics.
The Insurance Investment Outsourcing Report 2026 – covering USD5.5 trillion in third-party general account insurance assets under management across 96 asset managers – finds allocations to third-party private insurance AUM reached USD947 billion accounting for one-third of outsourced insurance allocations.
The research reveals that insurers have moved steadily beyond traditional private placements into middle-market lending, infrastructure debt and structured credit, with 67 per cent of participating managers offering private fixed income capabilities alongside their public strategies.
The study also finds burgeoning use of outsourcing by European and British insurers with these regions accounting for 38 per cent of total outsourced insurance AUM, which Sandeep Sahai, Chief Executive Officer of Clearwater Analytics, said reflects an outsourcing market that is no longer dominated by North America.
“Private markets have crossed a threshold, Europe has reshaped the map, and the sophistication this industry now demands across asset classes, geographies, and regulatory environments is compounding,” Sahai said.
Mauro Carli,Senior Equity Research Analyst, Insurance and Asset Management at Lombard Odier, said private markets are a “natural fit” for insurance portfolios since illiquid assets held over the long term, mainly in unlisted structured credit instruments, can match firms’ liabilities and generate higher risk-adjusted yields compared with listed credit instruments of the same quality or rating.
“Some types of unlisted credit, including direct investments in real estate, often provide stronger collateral and allow insurers to customise loan structures that better match their liabilities. In addition, these assets diversify sources of cash flow beyond traditional bonds, many of which are backed by income linked to real estate,” Carli said.
At the same time, insurance companies are an attractive proposition for fund managers.
Carli said: “Life insurers carry significant asset leverage because they aim to match their liabilities with assets of the same duration. This makes them attractive to alternative asset managers in their quest for asset sourcing. Insurance assets provide more stable, permanent capital than traditional funds because annuity policyholders, for example, cannot withdraw their funds.”
Carli added that insurers’ long-duration liabilities push them towards illiquid assets, especially private credit, which offer higher returns than public markets.
“Another factor is that insurers offer resilient cash flows with stable dividends,” he noted.
However there has been some concern about the security of investing in private credit as emerging pressures in certain segments of private credit, particularly where underwriting standards weakened amid rapid market growth and increased competition for assets.
Sahai said: “Insurers have generally maintained a disciplined approach to manager selection, portfolio construction, and structural protections, often emphasizing senior secured positions. While many portfolios are expected to be positioned to navigate potential stress, the degree of resilience across strategies and managers will become clearer through a more prolonged credit cycle.”
