Insurers globally are poised to considerably increase their allocations to private assets, driven by an anticipated rise in investable capital, a new study by Ortec Finance reveals. The research, which polled 100 senior executives in insurance asset management or firms supporting insurers, found that 77% expect an increase in capital within the next year, with only 2% foreseeing a definite decline.
The study, which surveyed investment managers overseeing approximately $10.48 trillion in assets, highlights a strong appetite for private debt, with two-thirds of respondents identifying it as the asset class most likely to experience the largest percentage increase in allocation. Private equity and real estate followed, also showing substantial anticipated growth.
Inflation protection emerged as the primary motivator for investing in private assets, cited by 35% of participants. Diversification was the second most important factor at 30%, while 22% prioritised cashflow matching, and 13% sought returns and illiquidity premiums. Furthermore, around 62% of those surveyed anticipate higher distributions from private equity in the future.
Despite this positive outlook, concerns persist regarding the transparency and reporting standards of private fund managers. Over a fifth (21%) of respondents strongly agreed that inadequate transparency and reporting hinder insurers from investing in certain private funds, as it impedes their ability to demonstrate regulatory compliance. A further 79% slightly agreed with this sentiment.
|
Private asset class |
Percentage selecting among their top three most likely to see the biggest increase in allocations over the next 12 months |
|
Private debt |
68% |
|
Private equity |
49% |
|
Private real estate/REITS |
47% |
|
Real estate debt |
46% |
|
Infrastructure equity |
41% |
|
Direct real estate |
36% |
|
Infrastructure debt |
13% |
Source: Ortec Finance
“The study highlights continued momentum behind private asset allocation, with many insurers expecting to see an increase in capital to invest in the year ahead,” said Hamish Bailey, managing director UK and head of insurance and investment at Ortec Finance. He added that the motivation is driven by “the search for inflation protection in real world assets, diversification benefits, and a long-term focus.”
However, Bailey also acknowledged the challenges. “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 capitalise on these opportunities.”
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