Asia-Pacific insurers plan to increase private market and hedge fund holdings from 20% to 33% of portfolios within five years, though operational challenges could separate competitive winners from losers, according to research from Clearwater Analytics.
The study surveyed insurance asset management executives at firms managing $3.823 trillion in total assets. Findings showed insurers currently allocate an average of 20% of insurance-focused assets to private markets, with that figure forecast to rise to 33% within five years.
The research, conducted in October 2025, interviewed 150 senior executives from asset management arms of life, health and general insurers in Hong Kong, Singapore, and Australia, as well as third-party investment firms working for life insurance carriers.
Executives cited operational concerns about investing in private markets despite the planned expansion. Two in five executives, or 41%, identified increased complications from a legal and compliance perspective, while 29% said viewing private market assets alongside traditional assets proved challenging.
However, 91% of respondents said their technology systems were very or quite effective at processing new asset classes, and 92% reported it was very easy or quite easy to determine fair value for private market assets.
The shift towards private markets is driven largely by diversification goals. Eighty-eight per cent (88%) of executives expect diversification to increase over the next three years. Third-party managers showed the strongest expectations, with 30% predicting dramatic increases compared to 10% of life and health insurers and 4% of general insurers.
An overwhelming 93% of executives agreed the most attractive investment opportunities currently exist in private markets rather than public markets, with 37% strongly agreeing.
The planned expansion comes amid broader sector-wide trends towards measured growth. Industry outlooks for 2026 signal steady premium growth for insurers in Asia-Pacific, buoyed by healthy underwriting margins, even as economic volatility and geopolitical pressures persist, Bloomberg reported. Analysts note that, while headline premium increases may moderate, demand for diversified products and capital management solutions remains strong.
“APAC insurers are firmly convinced how attractive investing in private markets, which have produced consistently attractive returns for their portfolios,” said Shane Akeroyd, chief strategy officer and president of Asia Pacific at Clearwater Analytics.
“That is reflected in the forecasts about rising allocations to private markets and the recognition that many of the most attractive investments are in that sector. However, operational concerns have to be addressed by insurers,” Akeroyd said.
The research, commissioned by Clearwater Analytics and conducted by independent research agency PureProfile, found insurers still plan to increase allocation to public markets over the next 24 months, though at a slower rate than for private markets and hedge funds.
Adding urgency to operational challenges, 96% of executives expect increased merger and acquisition (M&A) activity over the next three years, suggesting firms with superior capabilities will gain competitive advantages in a consolidating market.
M&A activity in Asia-Pacific softened as 2025 drew to a close. Regional insurance M&A transactions fell in the third quarter of 2025, with just 14 deals recorded across the APAC market, down from 20 in the prior quarter and 17 in the same period a year earlier. The total number of announced deals across mergers, private equity, and venture financing down about 3% compared to 2024, reflecting more selective capital deployment amid economic uncertainty.
Industry observers say this more measured M&A environment is shaping insurers’ strategic choices. Many carriers are prioritising scale and strategic fit over volume, focusing on bolt-ons or targeted acquisitions rather than broad-based consolidation.
