Alternative Opportunities for Insurers | Q3 Update

In our Q3 2025 edition of Alternative Opportunities for insurers, we continue to cover views on a variety of private asset classes from Invesco Solutions and our partner firms. Within this piece, we’ll present a framework for analyzing across alternative markets to help inform insurers’ investment decisions.

Private credit

Although we continue watching for an uptick in M&A activity, we remain constructive on private credit for insurance portfolios given its defensive properties and the spread pickup available and attractive absolute yields in a higher-for-longer rate environment. Real estate debt in particular may be attractive for insurance portfolios considering its high current income and favorable risk-based capital treatment.

Private equity

As mentioned previously, we are still cautious on private equity. Given high valuations and borrowing costs, the return potential doesn’t justify utilizing precious risk-based capital budget. For insurers seeking higher-return strategies, we believe distressed / special situations may be a better place to deploy capital – namely, situations where capital solutions for otherwise-solid businesses are needed.

Real assets

We are more constructive on real asset exposure compared to last quarter. While real estate remains challenged, we are increasingly confident that valuations have bottomed. As long-term investors, insurers allocating to the space now may benefit from attractive forward-looking returns, and real estate equity is more capital-efficient than other forms of private equity exposure.

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This information is intended for Institutional Investors that are US residents.

Alternative strategies may include investments in private equity, private credit, private real estate and infrastructure, which may involve additional risks such as lack of liquidity and concentrated ownership. These types of investments may result in greater fluctuation in the value of a portfolio. Private Market investments are exposed to risk, which is the risk that a counterpart is unable to deal with counterparty obligations. Changes in interest rates, rental yields and general economic conditions may result in fluctuations in the value of any underlying strategies. These types of strategies may carry a significant risk of capital loss and other market risks.

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. This should not be considered a recommendation to purchase any investment product. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them. Please obtain and review all financial material carefully before investing.