A growing cohort of property and casualty (P&C) insurers is increasing allocations to private markets – including private equity, real estate and hedge fund strategies – even as some traditional institutional investors slow commitments and reassess expected returns.
While exposure to illiquid assets has long been a feature of life insurer balance sheets, new data from S&P Global Market Intelligence shows that general insurers such as Allstate, Liberty Mutual and Nationwide have maintained or expanded alternative allocations, with several large carriers holding at least 15% in private markets last year. Others, including The Hartford, Chubb and USAA, remain more conservative but have more than doubled their exposure over the past decade.
The shift comes at a time when pensions, endowments and other long-duration investors are increasingly questioning whether private markets can continue to deliver the same premium returns seen over previous decades. In some cases, investors have sought secondary sales of private fund interests at discounted valuations, reflecting a more cautious stance toward illiquid strategies.
For P&C insurers, however, the trade-off is more complex than for life insurance peers. Unlike life insurers – whose liabilities are more predictable and tied to mortality assumptions – P&C carriers face volatile, event-driven claims linked to catastrophes such as hurricanes and wildfires. That unpredictability makes liquidity management more challenging when capital is tied up in long-dated private assets.
Despite this structural constraint, insurers continue to seek higher yields in a persistent low-return environment for traditional fixed income. According to Keefe, Bruyette & Woods analyst Meyer Shields, several years of strong underwriting performance have given insurers greater confidence to lean into investment risk as a supplemental earnings driver.
Recent industry data suggests underwriting conditions have been unusually favourable, with 2024 and 2025 marking some of the strongest gains in a decade, supported by higher deductibles and stricter claims management.
However, analysts caution that investment income is becoming increasingly important for earnings growth as pricing momentum plateaus. As Piper Sandler’s Paul Newsome notes, organic premium growth is harder to achieve in a competitive market, pushing insurers to rely more heavily on portfolio returns—despite historically mixed results in active investment management.
Across the sector, alternatives now represent roughly 6% of P&C insurer portfolios, up from 4% in 2014, according to S&P Global Market Intelligence. The data excludes private credit in certain contexts and focuses largely on private equity, venture capital, real assets and hedge fund exposures structured through joint ventures and limited partnerships.
There are signs that allocation strategies are evolving further. At The Hartford, alternative exposure has risen from around 3% a decade ago to roughly 7% in 2024, with recent filings showing exposure to private credit vehicles managed by large alternative asset managers such as TPG.
Meanwhile, AIG has moved to deepen its partnership model in private markets, announcing a long-term arrangement with CVC Capital Partners earlier this year. The agreement includes a multi-billion-dollar allocation into private credit strategies alongside the transfer of existing private equity holdings into externally managed structures.
For alternative asset managers, insurers are increasingly viewed as a key source of long-term capital, particularly in property and casualty markets where allocations remain comparatively under-penetrated versus life insurance. S&P analyst Tim Zawacki noted that the sector still represents a significant “white space” for private markets expansion.
That said, momentum may be moderating. Rising yields on government bonds, including long-dated Treasurys near 5%, have improved the relative attractiveness of traditional fixed income. At the same time, sentiment around private credit has become more cautious, with some retail-facing vehicles experiencing outflows and institutional allocators reassessing risk premiums.
Even within the insurance sector, caution is emerging. AIG CFO Keith Walsh recently indicated that deployment into private credit had slowed due to changing market conditions.
Historical episodes also continue to shape risk awareness. The collapse of credit-related strategies during the global financial crisis contributed to significant losses at Swiss Re, which required external support from Berkshire Hathaway, underscoring the potential downside of concentrated alternative exposures.
Still, some insurers argue that disciplined allocation and long investment horizons allow them to navigate illiquid markets effectively. Liberty Mutual has previously emphasised its long-standing experience in managing risk through diversified investment portfolios, while USAA attributes growth in alternative assets primarily to legacy real estate strategies rather than recent allocation shifts.