More than half of insurers plan to increase their exposure to private credit over the next two years, with investment-grade and asset-backed strategies attracting the strongest demand, according to new research by Marsh.
The firm’s 2026 Global Insurance Investments Survey found that 57 per cent of insurers expect to increase private credit allocations over the next 12 to 24 months.
Private credit was the leading area of planned investment growth, ahead of public investment-grade fixed income, which was chosen by 48 per cent of respondents.
This represents a sharp increase from Marsh’s 2024 survey, when 32 per cent of insurers said they planned to increase their private credit exposure.
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Respondents were primarily focused on the investment-grade end of the market, with two-fifths expressing interest in investment-grade direct lending and private placements, while 38 per cent favoured investment-grade structured credit, asset-based finance, net asset value lending and fund finance.
Appetite was strongest among North American insurers. Almost three-quarters of Canadian respondents and 65 per cent of US insurers planned to increase allocations, compared with 51 per cent in Europe and 46 per cent in the UK.
Larger insurers were also more likely to expand their exposure, with 81 per cent of firms managing more than $25bn (£18.6bn) planning to increase allocations, compared with 46 per cent of smaller insurers.
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“Private credit is a compelling opportunity for insurers, especially in the asset-backed space,” said David Morrow, Mercer’s global insurance proposition leader.
“Insurers can diversify away from corporate risk while realising meaningful yield pickup over similar-rated, investment-grade public market bonds.”
However, investors remain alert to weakening returns and credit standards, with two-thirds citing reduced illiquidity premiums and tighter spreads as a concern.
A further 51 per cent were concerned about rising defaults, wider spreads and increased use of payment-in-kind structures.
The report also identified a capability gap, with only 30 per cent of insurers saying they had most of the private markets expertise needed to invest confidently.
