The Rebalance: From yield recovery to disciplined deployment
The challenge for insurers is no longer finding yield, but deploying capital with precision
How are some insurers balancing income, capital efficiency and resilience in a more complex investment environment?
After years of yield scarcity, according to the survey 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 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, I believe 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
Insurers are confident about their ability to meet their investment objectives, despite significant concerns about geopolitical risk.
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.
The survey suggests that the ability to execute in private markets - whether supported by investment expertise or governance - is a major differentiator.
Key insight
Only 30% of respondents reported having “most” of the in-house capability required to research and allocate capital across relevant private-market asset classes, while 21% reported having no capabilities at all.
The survey reveals a material difference in how insurers are using artificial intelligence (AI) in their investment functions, with adoption rates highest among the largest insurers.
Key insight
More than half of respondents (54%) reported that they were not meaningfully using AI across their organization’s investment function.
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 may increasingly depend not only on where capital is allocated, but on the capabilities and operating models that support those decisions.
