By Heather Gillers
Home and car insurers are joining other deep-pocketed institutions from life insurance companies to university endowments in snapping up private investments. They are late to the party.
Major insurers such as Allstate, Liberty Mutual and Nationwide kept at least 15% of their holdings in assets such as private equity and hedge funds last year, according to research by S&P Global Market Intelligence. Other carriers, including The Hartford Insurance Group, Chubb and USAA, keep less money in such investments, but their share more than doubled in the past decade, S&P Global analyst Tim Zawacki found.
Property and casualty insurers' moves into so-called alternative investments have picked up just as many pensions and endowments have started to question whether the returns those funds can generate will be as attractive as they have been in decades past. Many institutions are pulling back on private-equity investments, and some have even sought to unload stakes in those funds at a discount.
Investing in private funds, which are illiquid -- meaning investors can't cash out whenever they like -- is a riskier proposition for property and casualty insurers than for firms that sell life policies and annuities. That is because payouts to policyholders are less predictable. Life insurers can plan around mortality rates, but it is hard to know when a bad year for hurricanes or wildfires will force property insurers to shell out huge quantities of cash to settle claims.
Insurers are always on the hunt for higher-yielding assets, though, and a few winning years have emboldened them to invest more aggressively to bolster profits, said Keefe, Bruyette & Woods analyst Meyer Shields.
Property insurers had the best underwriting gains of the past decade in 2024 and 2025, according to S&P. Higher deductibles and tighter claims criteria are leading to fewer pay outs.
"It's hard to raise prices more, so if they're trying to have profit growth it is going to be hard to do that unless you improve your investment returns," said Paul Newsome, senior analyst with Piper Sandler. On the other hand, he said, "insurance companies have not historically been great investors," and "if you're a hurricane victim and you need a place to sleep tomorrow, you need the cash right now."
Across property-casualty insurers, the share of alternatives was 6% in 2025, up from 4% in 2014. S&P didn't look at private credit, which has remained a small portion of property-casualty portfolios even as it has ballooned at their life-insurance counterparts. Instead, the study tracked joint ventures and limited liability company investments that typically consist of stakes in private equity, venture capital, real estate and hedge funds. It excluded American International Group because of its 2016 decision to scale back hedge-fund investments, as well as insurance giant Berkshire Hathaway.
"In terms of what we would consider to be private equity, it is fair to say that we are sort of at a high point," Zawacki said, adding that he expects more growth.
At The Hartford, which sells property-casualty insurance along with employee benefits, the alternative investments tracked by S&P increased to 7% in 2024 from 3% in 2014. The 10 largest investment exposures the firm reported in the first quarter of this year included a private credit instrument managed by alternative-asset giant TPG.
AIG in January announced a long-term partnership with European alternative asset manager CVC Capital Partners under which the firm will invest $2 billion of the insurer's money in private credit. AIG will also shift $1.5 billion in existing private-equity investments under CVC's management.
"You have many of the alternative asset managers who have highlighted insurance assets under management as one of the core drivers of their overall expansion," Zawacki said. "There isn't as much white space in life as there is in property and casualty."
Property insurers now have about the same share as life insurers of the private-equity and hedge-fund-type assets tracked by S&P -- about 5%. But private credit makes up only 3% of property insurers fixed income portfolios, the core holdings insurers rely on to pay claims, according to research by insurance ratings firm AM Best. That compares to 26% for life insurers.
That may be changing. At a conference last month, Michael Pagano, Apollo Global Management's head of third-party insurance client management, said that he was seeing more purchases by property-casualty insurers of shorter-term private credit.
Alternative-asset managers' pitch has gotten more complicated, though. Thirty-year Treasurys are yielding nearly 5%. Credit fears have individual investors fleeing the retail private-credit funds known as business-development companies. Some big investors are backing away from private equity. In an earnings call last month AIG's Chief Financial Officer Keith Walsh said it had "slowed our deployment" of new money into private credit "given market conditions."
And taking on investment risk hasn't always worked out -- even for life insurers with their more predictable payouts. Reinsurer Swiss Re had to be bailed out by Berkshire Hathaway after its investments in credit-default swaps tanked in the 2008-09 financial crisis. In the late 1980s and early 1990s, California regulators seized two major life-insurance companies two months in a row after their extensive junk-bond holdings tanked.
AIG has had a mixed record with alternatives. The firm until 2024 maintained a large life-insurance business alongside its property-casualty arm, and both invested in hedge funds. AIG cut back on those investments 10 years ago after its then-chief executive pronounced the returns "greatly disappointing."
Other insurers say they have successfully maintained private-asset portfolios for decades. "We are experienced underwriters of risk," Liberty Mutual's investment arm said in a statement. USAA said solid returns on its decade-old commercial real-estate portfolio -- not new allocations -- were the main driver of the growth documented by S&P. Allstate and Nationwide declined to comment.
Write to Heather Gillers at heather.gillers@wsj.com
(END) Dow Jones Newswires
June 08, 2026 15:05 ET (19:05 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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