Alternative opportunities for insurers

In our Q3 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

Although we continue watching for an uptick in M&A activity, we remain constructive on private credit for insurance portfolios given its defensive properties and the spread pickup available and attractive absolute yields in a higher-for-longer rate environment. Real estate debt in particular may be attractive for insurance portfolios considering its high current income and favorable risk-based capital treatment.

Private equity

As mentioned previously, we are still cautious on private equity. Given high valuations and borrowing costs, the return potential doesn’t justify utilizing precious risk-based capital budget. For insurers seeking higher-return strategies, we believe 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 are more constructive on real asset exposure compared to last quarter. While real estate remains challenged, we are increasingly confident that valuations have bottomed. As long-term investors, insurers allocating to the space now may benefit from attractive forward-looking returns, and real estate equity is more capital-efficient than other forms of private equity exposure.