Insurers Adapt: Balancing Risk and Reward in Uncertain Times

Inflation and Cautious Investments

Insurers are facing a tough year ahead, with inflation being a major concern. A recent survey shows that most insurers are being cautious with their investments. Only a small group, about 12%, plan to take on more risk in 2025.

Growing Interest in Private Markets

There is a growing interest in private markets. Nearly a third of insurers want to invest more in private markets, while more than half plan to keep their current investments.

Promising Opportunities

• Private credit
• Infrastructure
• Multi-alternative strategies

Public Markets Remain Important

Public markets are still important, with 73% of insurers planning to maintain their current investments and 21% looking to increase them.

Operational Shifts

Insurers are changing how they operate. Many are moving away from relying solely on their in-house teams and are adopting hybrid models that combine internal expertise with external partners. This shift is supported by significant investments in technology.

Focus on Capital Management

Additionally, insurers are focusing more on capital management. Over the next year, many plan to:

• Use reinsurance sidecars
• Increase the use of third-party capital
• Expand their captive management capabilities

This focus is driven by the need to:

• Diversify income
• Optimize balance sheets
• Access non-dilutive sources of capital

Sustainability Remains a Priority

Sustainability remains a priority for insurers. For the second year in a row, clean energy infrastructure is seen as the most attractive opportunity for sustainable investing, followed by:

• Core infrastructure
• Green bonds