Insurance asset managers are dramatically increasing their allocations to private markets. Data from 101 insurance asset managers and consultants, representing  US$4.5 trillion in unaffiliated general account insurance assets under management ( AUM ), shows that 21% of their assets held in these accounts are invested in private markets, a new report says. That compares with 15% in 2022, 9% in 2020, and 7% in 2015.

The report, The 2025 Insurance Investment Outsourcing Report ( IIOR ), was produced by Clearwater Analytics, a fintech firm that provides automated investment accounting, performance, compliance, and risk reporting services, in collaboration with DCS Financial Consulting.

Unaffiliated general account assets are investments owned by an insurer but managed by an external, third-party asset manager.

Of the amount insurers have invested in fixed income assets through these accounts,17% is in private credit holdings. That’s up from 12% in 2022, 7% in 2020, and 4% in 2015.

Of the assets invested in equities through unaffiliated general accounts, insurers have around 39% held in private equity and equity alternatives, compared with 29% in 2022, 23% in 2020, and 30% in 2015.

The IIOR also shows that 31% of the insurers’ private market fixed income investments held in unaffiliated general accounts are via private placements, followed by 28% in mortgages and other real estate fixed income investments, and 17% in middle-market credit.

In terms of allocations to private equities and equity alternatives through insurance unaffiliated general accounts, 42% are held in private equity and venture capital funds and 33% in real estate funds.

Turning to external managers

Increasing allocations to illiquid private assets can be more complicated and require a higher degree of reporting and transparency than investing in traditional liquid asset classes, the report says. As insurer demand for diversifying sources of return has grown, many are turning to external managers who have presence and scale in private markets as well as the operational infrastructure to support the strategies.

The value of private market AUM held in these accounts has surged from less than US$50 billion to over US$800 billion over the past decade. This growth has been at the expense of public asset classes, particularly public fixed income, which was reported at 79% for 2024, down from 85% in 2022 and 93% in 2015.

“The insurance sector is undergoing a period of significant transformation and that is underlined by how organizations continue to turn their attention towards private markets and alternatives,” says Clearwater Analytics chief executive officer Sandeep Sahai.

“The data we collect on the insurance industry has seen outsourced AUM almost triple to US$4.5 trillion in the past decade and the private asset class AUM surge from less than US$50 billion to over US$800 billion.”

Steve Doire, owner of DCS Financial Consulting and strategic advisor to Clearwater, highlights how the shift to private markets and alternative assets is fuelling the growing demand for external fund managers. “Insurers increasingly use external managers for both traditional fixed income and complex alternative assets, including private credit – a shift that was barely visible five years ago,” he says.