US insurers are entering 2026 with a more positive investment outlook despite expectations of higher inflation, increased liquidity risk, and lower Federal Reserve interest rates – even as private equity continues to reshape portfolio strategies, Conning's annual Insurance Investment Risk survey has found.
The survey drew responses from 201 US property and casualty and life insurance investment decision-makers. A majority identified opportunities in private markets, high-quality fixed income, and infrastructure as drivers for increasing investment risk in the year ahead.
Among the findings, 57% of US insurers expect inflation to increase moderately over the next 12 months. Meanwhile, 52% expect the yield on the 10-year Treasury to end the year below 3.5%, and 47% said Federal Open Market Committee actions will be significantly important to their 2026 investment strategy.
"An increasingly complex market requires insurers to balance heightened risk awareness with the need to adapt to shifting macroeconomic expectations," Matt Reilly (pictured above), managing director and head of Conning's Insurance Solutions group, said. "Choosing the right partners, tools, and investment strategies is critical."
Overall sentiment improved after a slight dip in the prior year's survey, with 76% saying investment opportunities are improving. Inflation re-emerged as a key concern, ranking second after placing seventh last year. Liquidity risk also climbed – a shift attributed to growing private asset levels in portfolios.
The trend toward private markets extends beyond survey sentiment. Research from Deloitte's 2026 global insurance outlook, published in late 2025, found insurer-managed assets expanded 25% to $4.5 trillion in 2024, with private placements accounting for 21.1% of total insurance assets under management.
Separately, a Goldman Sachs Asset Management survey from 2025 showed 61% of CIOs expected private credit to provide the highest total return over the following year.
US insurers' appetite for private assets continues to expand despite liquidity risk concerns. Some 79% of respondents expect to allocate between 10% and 25% to private assets within two years, up from 63% previously.
Current allocations also rose, with 87% reporting holdings between 5% and 20%, compared with 71% a year earlier. Asset-based finance was the most commonly cited growth area at 60%.
Federal Reserve policy remains a factor, with rate cut expectations pushing the share of US insurers planning to increase portfolio duration to 76% from 64%. Floating-rate asset exposure is expected to rise to 57% from 53%.
Portfolio turnover jumped to 73% from 50%, with most citing tactical market opportunities. Roughly half of respondents plan to increase allocations to private equity, private placements, real estate, and infrastructure.
