[SINGAPORE] While inflation remains a pressing concern for most insurers, their appetite for private assets remains robust. Despite the economic challenges posed by rising inflation and slowing growth, many insurers are looking to increase their exposure to private credit in the coming year.
According to the results of Goldman Sachs Asset Management (GSAM)’s 14th annual global insurance survey released on Tuesday (Mar 25), more than half (58 per cent) of insurers plan to increase their allocations to private credit over the next 12 months. This trend persists despite the challenges posed by rising inflation and slowing economic growth on markets.
A majority (52 per cent) of insurers identified inflation as a significant macroeconomic risk to their investments. This marks an increase from 42 per cent in 2024, bringing it close to the levels seen in 2023.
The GSAM survey, which seeks to identify emerging trends within the global insurance industry, was conducted from January to February 2025.
It gathered insights from 405 chief information officers and chief financial officers on the economic environment, asset allocation decisions, return expectations, portfolio construction, and industry capitalisation. Collectively, these executives represent insurers with a combined US$14 trillion in assets, which accounts for about half of the global insurance sector’s balance sheet.
“Our 14th annual global insurance survey shows insurers are navigating evolving macroeconomic concerns by rotating toward asset classes with the potential to provide both attractive risk-adjusted returns and diversification benefits,” said Mike Siegel, global head of insurance asset management and liquidity solutions for GSAM, the asset management arm of global investment bank Goldman Sachs.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Amid this industry-wide rotation, important new trends in liquidity management may be developing,” he added.
Investment risks for insurers
Beyond inflation, the most significant macroeconomic risks to insurers’ portfolios include an economic slowdown or recession in the US (48 per cent), credit and equity market volatility (47 per cent), geopolitical tensions (43 per cent), and tariffs or trade disputes (32 per cent).
“As investors wait for policy clarity, many are concerned with the prospect of markets simultaneously confronting rising inflation and slowing economic growth in the US,” said Siegel.
However, 76 per cent of insurers expect the 10-year US Treasury yield to remain between 4 and 5 per cent by year-end 2025, a range consistent with the past year. GSAM expects underlying inflation to continue to decline, and maintains an optimistic outlook for US growth.
While opinions on the Euro area and China are more cautious, Siegel noted “actionable investment opportunities exist for discerning investors seeking to improve their risk-adjusted returns”.
When asked which asset classes will provide the highest total return over the next 12 months, insurers remained bullish on private assets. For the second consecutive year, private credit (61 per cent) topped the list. US equities (57 per cent) followed closely, with private equity (55 per cent) rounding out the top three. Private equity secondaries (30 per cent) and high-yield debt (28 per cent) also made the list.
Matt Armas, global head of insurance for GSAM, expects the private credit market to continue expanding in 2025.
“Through this growth, insurance companies will have ample opportunities to diversify their direct lending portfolios while pursuing attractive risk-adjusted returns,” he said.
