The Rebalance: From yield recovery to disciplined deployment
The challenge for insurers is no longer finding yield, but deploying capital with precision
How are insurers balancing income, capital efficiency and resilience in a more complex investment environment?
After years of yield scarcity, insurers are operating in a fundamentally different investment environment. Higher rates have restored attractive income opportunities, but they have also raised the bar for investment decision-making.
Our latest Global Insurance Assets Investment Survey shows insurers becoming more selective in how they deploy capital, balancing income generation with capital efficiency, liquidity and resilience. Drawing on insights from insurers across the globe, the survey explores how the industry is adapting to a more complex investment landscape.[1]
Investment decisions are increasingly being assessed through multiple lenses, including capital treatment, liquidity, governance and liability fit. In today's market, the quality of return matters as much as the level of return.
Partner, Global Insurance Proposition Leader, Mercer, a Marsh business
Four themes for insurers in 2026
The return of higher yields has expanded the opportunity set for insurers. Yet the survey suggests the focus has moved beyond simply generating income. Insurers are increasingly evaluating investments based on their ability to support liabilities, improve capital efficiency and create durable balance-sheet value.
Key insight
The question is no longer where income can be found, but which sources of income can withstand volatility and support long-term business objectives.
Private credit is the leading area of planned allocation growth among survey respondents. However, insurers are showing a clear preference for investment-grade, asset-backed and structurally protected opportunities, reflecting a focus on resilient income, contractual cash flows and capital-aware implementation.
Key insight
Private credit is increasingly being viewed as a strategic portfolio-construction tool rather than simply a source of additional yield.
Strong appetite for private markets is not always matched by implementation readiness. The survey highlights a growing gap between insurers' allocation ambitions and the governance, operational and analytical capabilities required to support increasingly complex portfolios.
Key insight
Investment outcomes increasingly depend on implementation capability as much as investment strategy.
Geoeconomic uncertainty has emerged as insurers' leading investment concern, ahead of credit risk and interest-rate volatility. Regulatory scrutiny, market fragmentation and technological disruption are reshaping how insurers assess risk and portfolio resilience.
Key insight
The insurers best positioned for the next phase will be those that combine investment discipline with flexibility, robust governance and strong risk-management frameworks.
A closer look at the numbers
cite investment returns as a strategic priority
identify capital efficiency as a key investment objective
expect to increase private credit allocations over the next 12–24 months
say geoeconomic risk is a leading investment concern
say their investment business is not yet meaningfully using AI
A more demanding investment environment
The survey paints a picture of an industry adapting to a new investment regime, where stronger income opportunities are being matched by a greater focus on capital efficiency, governance and resilience.
Success will increasingly depend not only on where capital is allocated, but on the capabilities and operating models that support those decisions.
