Property insurers are increasingly moving into private assets, even as other institutional investors pull back from the space.
Illiquid investments, such as private credit and real estate, have long been a staple in the portfolios of life insurers. These assets often offer higher yields in exchange for reduced liquidity.
For property insurers, however, the strategy carries greater risk. They face sudden, large payouts tied to natural disasters like hurricanes and wildfires.
This need for quick cash makes illiquidity a more dangerous proposition for property insurers than for their life insurance counterparts.
Despite these risks, many property insurers are boosting allocations to private assets. They are seeking higher returns in a competitive market.
Other investors, including pension funds and endowments, are pausing new commitments to private markets. They are reassessing valuations and liquidity risks.
The trend highlights a growing divide in institutional investing. Property insurers are leaning into private assets at a time when caution is prevailing elsewhere.
