Insurers remain bullish on private credit
Insurance companies plan to increase their private credit allocations in the next 12 months, a new survey by Goldman Sachs Asset Management has found.
The asset manager’s 14th annual global insurance survey reported that insurers remain bullish on private assets. When asked which asset classes will provide the highest total return during the next 12 months, 61 per cent of respondents named private credit.
58 per cent of the 405 global insurance company executives surveyed said that they are planning to increase allocations to private credit during the next 12 months.
Read more: Goldman Sachs seeks to more than double private credit portfolio
“The private credit market has experienced a significant transformation during the past decade,” said Matt Armas, global head of insurance for Goldman Sachs Asset Management.
“We expect it will continue to expand in 2025. Through this growth, insurance companies will have ample opportunities to diversify their direct lending portfolios while pursuing attractive risk-adjusted returns.”
However, UK insurers are less enthusiastic about private credit then their global counterparts. 46 per cent of UK respondents said that they expect the asset class to deliver the highest total returns in the coming year, ranking it in third place behind private equity (58 per cent) and US equities (52 per cent).
UK-based insurers are also more concerned about the impact of inflation on their portfolios, with 52 per cent describing it as the most significant macroeconomic risk to their investment portfolio, versus 32 per cent globally.
Read more: Goldman exec expects more regulatory focus on private credit
UK respondents have a higher risk appetite for the year ahead, compared to the global average. Overall, four in 10 (39 per cent) plan to increase overall risk in their portfolios in the next 12 months, in comparison to one quarter (26 per cent) globally.
“Our 14th annual global insurance survey shows insurers are navigating evolving macroeconomic concerns by rotating toward asset classes with the potential to provide both attractive risk-adjusted returns and diversification benefits,” said Mike Siegel, global head of insurance asset management and liquidity solutions for Goldman Sachs Asset Management.
“Amid this industry-wide rotation, important new trends in liquidity management may be developing.”
Read more: Largest managers and funds increasingly dominate private credit
