BlackRock Report: Insurers Embrace Reinsurance Sidecars and Private Markets Amid Inflation Concerns

BlackRock's 14th annual Global Insurance Report highlights that 67% of insurers plan to utilize reinsurance sidecars within the next year as part of strategic capital management.

The report surveyed 463 senior investment professionals from 33 markets with combined assets of $23 trillion, revealing a cautious approach toward increasing overall investment risk, with only 12% planning to do so in 2025.

Inflation remains the top risk for 63% of insurers globally, driving shifts in investment strategy and risk management. While public markets continue to be the portfolio backbone—73% of insurers maintain their current allocations and 21% intend to increase them—there is a notable pivot toward private markets. Approximately 30% of insurers aim to boost private market allocations, focusing on private credit, infrastructure, and multi-alternative strategies.

The industry is evolving towards flexible operating models, with around 85% of insurers adopting hybrid asset management structures that combine in-house expertise and external partnerships. The integration of AI-driven portfolio, risk, and analytics tools reflects growing technology adoption to enhance decision-making.

Capital management innovations are crucial to this landscape, with over half of insurers planning to expand the use of third-party capital and strengthen captive insurance capabilities. Sustainability investment priorities remain prominent, led by a continued focus on clean energy infrastructure cited by 55% of respondents, alongside investments in core infrastructure and green bonds.

Mark Erickson, Global Insurance Strategist at BlackRock, emphasizes that insurers are managing market volatility with disciplined strategies while exploring long-term growth opportunities in private markets. These trends underscore insurers' adaptive approaches amid evolving regulatory and economic environments, highlighting the balance between risk management, technology adoption, and ESG integration.