Alternative Opportunities for Insurers | Q2 Update

In our Q2 2025 edition of Alternative Opportunities for Insurers, we continue to cover views on a variety of private asset classes from Invesco Solutions and our partner firms. Within this piece, we’ll present a framework for analyzing across alternative markets to help inform insurers’ investment decisions. 

Private credit

Despite still-muted private equity deal activity, we remain constructive on private credit for insurance portfolios given the spread pickup available for taking on illiquidity and / or complexity risk, particularly considering most insurers maintain ample liquidity relative to their liability profiles. We also find alternative credit to be a compelling diversifier relative to public corporate bond exposure which is heavily represented in most insurance portfolios.

Private equity

Leveraged buyout (LBO) activity is still fairly low with valuation gaps often preventing deal execution. We are still cautious on private equity relative to private credit considering alternative allocations are limited and private credit likely offers more attractive risk-adjusted returns. For insurers seeking higher-return strategies, distressed / special situations may be a better place to deploy capital – namely, situations where capital solutions for otherwise-solid businesses are needed.

Real assets

We continue to maintain a neutral stance on real asset exposure overall. While the asset class remains challenged, we believe we are close to the bottom for valuations. As long-term investors, insurers allocating to the space now may benefit from attractive forward-looking returns, particularly in light of a moderating interest rate backdrop. Infrastructure debt strategies can be particularly attractive to insurers seeking long duration for asset-liability management and capital-efficient exposure.

This information is intended for Institutional Investors that are US residents.

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations), and investors may not get back the full amount invested.

Alternative strategies may include investments in private equity, private credit, private real estate and infrastructure, which may involve additional risks such as lack of liquidity and concentrated ownership. These types of investments may result in greater fluctuation in the value of a portfolio. Private Market investments are exposed to risk, which is the risk that a counterpart is unable to deal with counterparty obligations. Changes in interest rates, rental yields and general economic conditions may result in fluctuations in the value of any underlying strategies. These types of strategies may carry a significant risk of capital loss and other market risks show less

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be
construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making
decision. As with all investments there are associated inherent risks. This should not be considered a recommendation to purchase any
investment product. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should
consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them.
Please obtain and review all financial material carefully before investing.