Insurance Carriers to Carry Out Its Role as Important LP in 2026

The hunt for new sources of capital (think HNW, retail channels, and co-investments) dominated the alternative market zeitgeist in 2025 and no doubt will continue as we move into the New Year. Fund raising is not getting any easier.

One structurally important source of capital, which falls under the category of big and boring and thus does not make the headlines so often, are life and annuity accounts. Insurance balance sheets are becoming more vital to private markets because – very simply – they supply large, long-duration capital, whether it is for private or structured credit, infrastructure debt/equity and even at times old-fashioned buyouts/growth funds.

Attraction to these markets can be a little different from other LPs, with preferences and themes more focused on yield enhancement (versus, say what the traditional credit investment returns), diversification and liability matching through longer-term private assets.

The names are familiar: MetLife, New York Life, Prudential Financial and outside the US, AXA and Legal and General, to name a few. But one of the biggest on the list, which was a surprise and unknown to me, is China Life Insurance Company. According to the PEI “Global Investor 150” report in July, China Life’s PE exposure, which emphasizes domestic growth and international strategies, totaled approximately $63.2 billion, or 7 percent of its overall commitments (just behind CalPERs).

With all that as background, it is no surprise that the numbers are growing. In fact, according to Clearwater Analytics, a comprehensive technology platform for investment management, said in its November report that alts investments from insurance companies “have fundamentally transformed from a fringe strategy to a portfolio cornerstone,” where one-third, or approximately $2.7 trillion, of US insurance industry assets, are invested in alternatives.

The largest share of alternatives allocation is in private credit and privately placed bonds and mortgage loans, mostly because these investments offer broader yield relative to the public markets. The shift clearly has an impact on portfolio management for the insurance industry, but pressures also exist on technology infrastructure because legacy systems can be outdated to manage the growth in alts assets, Clearwater notes. Processing time can take as much as five times longer.

A Word on PE Ownership
Other trends are building, and lines are blurring between asset managers and insurance carriers now that PE firms are backing behemoth insurance companies such as Athene, General Atlantic Financial Ltd., Truist and the list goes on. Benefits include strong and steady fee income to the GP, permanent stable capital, and higher valuations, but all in the industry are watchful of any regulatory winds that can impact the strategies.

Since the financial crisis, PE firms have completed over $900 billion in transactions by acquiring insurance liabilities, according to experts and research from McKinsey & Co. That gives GPs some 13% share of the US insurance market—up from 1% in 2012. The combination seems inevitable but keeps regulators a bit on edge as new parties enter the global insurance network. For now, those who see the benefits will rule.

Mark Kollar
Partner, Prosek Partners

Mark Kollar’s monthly Letter from America can be read at The Alternative Investor.