July 23, 2025

By Cindy Beaulieu, Chief Investment Officer - North America; Matt Reilly, Head of Insurance Solutions

 

Life and annuity insurers continue to pursue an expanded universe of investment options to generate additional portfolio income. Conning’s analysis suggests life and annuity insurers will continue to broaden portfolio strategies into alternative and private assets while maintaining exposure to their traditional fixed-income sources. 

The life and annuity industry¹ has grown steadily during the past decade (see Figure 1) and Conning expects that trend to continue. Demand for life products continues to rise, supported by higher crediting rates enabled by elevated interest rates. Insurers of all sizes - not just larger firms - are developing more sophisticated, diversified portfolios featuring more alternative, private, and less-liquid assets to help ensure they are better prepared to meet growing product demand.

Rising Interest Rates Supporting Market Growth
The 2020 pandemic led to supply-chain challenges and increased fiscal support, resulting in higher inflation and necessitating a strong response from the Federal Reserve. Inflation has since proven stubborn, causing interest rates to remain elevated. Conning believes secular shifts, such as aging populations, rising fiscal deficits driving greater levels of government bond issuance, and deglobalization, may continue to keep interest rates high and potentially raise them further. 

Higher interest rates have positively impacted life carriers. The North American insurance industry experienced significant expansion in the past decade, achieving annualized premium growth of 6.5% since 2015.²

Tail winds, such as higher interest rates, “peak 65³,” significant industry capital formation, increased reinsurance capacity and product innovation, should continue to spur industry growth. Conning expects these trends to help grow the industry’s assets, which have risen by 4.7% annualized since 2015 to $5.6 trillion at the end of 2024.⁴ 

 

Click below to continue reading Conning’s Viewpoint, “Private Assets, Alternatives Gain Ground: Evolving Investment Strategies in the Life and Annuity Insurance Sector."

 

  

Footnotes

1. ”Life and annuity industry” will be referred to as “life sector” or “life industry.”
2. Source: Copyright 2025 S&P Global Market Intelligence, LLC and Conning analysis.
3. ”Peak 65” refers to a significant demographic shift in the United States, specifically the period between 2024 and 2027, when a record number of Baby Boomers (born 
between 1946 and 1964) are turning 65 years old.
4. Source: Copyright 2025 S&P Global Market Intelligence, LLC and Conning analysis.

About Conning
Conning (www.conning.com) is a leading investment management firm with a long history of serving insurance companies and other institutional investors. Conning supports clients with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

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