US Insurers Remain Optimistic on Investment Conditions for 2026: Conning

Why It Matters

The outlook signals a potential shift toward higher‑return, less traditional asset classes, influencing portfolio strategies across the insurance industry. Understanding these trends helps insurers balance risk and growth in a volatile macro environment.

Key Takeaways

• 76% insurers see improving investment opportunities
• Inflation rises to second‑highest risk concern
• Liquidity risk climbs due to private‑asset allocations
• High‑yield fixed income and infrastructure attract capital
• 52% expect 10‑yr Treasury yield below 3.5%

Pulse Analysis

The U.S. property‑and‑casualty sector is navigating a shifting macroeconomic landscape as it looks ahead to 2026. A December 2025 Conning survey reveals that 76 percent of insurers believe investment opportunities are improving despite expectations of higher inflation, tighter liquidity and a lower Federal Reserve policy rate. The optimism stems from a combination of rising yields on high‑quality bonds and expanding avenues in private‑market assets such as digital platforms and traditional infrastructure. This sentiment marks a notable swing from last year’s more cautious outlook and signals a willingness to re‑balance portfolios toward higher‑return segments.

Nevertheless, the survey highlights persistent headwinds that could temper that optimism. Inflation has vaulted to the second‑most significant risk, with 57 percent of respondents forecasting a moderate increase over the next twelve months. Liquidity risk has also climbed the priority list, reflecting insurers’ growing exposure to illiquid private‑equity and real‑estate holdings. Market and asset‑price volatility remains the top portfolio concern, while recession risk ranks third. Moreover, just over half of the participants anticipate the 10‑year Treasury yield ending the year below 3.5 percent, and 47 percent view Federal Open Market Committee actions as a critical driver of strategy.

Against this backdrop, insurers are targeting sectors that can deliver attractive risk‑adjusted returns. High‑yield, investment‑grade fixed‑income securities offer a buffer against inflation while preserving capital, and infrastructure projects—both digital and conventional—provide stable cash flows and diversification benefits. Private‑market opportunities, though less liquid, are being pursued for their long‑term upside potential, especially as asset managers refine tools to manage associated risks. Executives like Conning’s Matt Reilly stress the importance of selecting the right partners and investment frameworks to navigate complexity. Companies that successfully balance heightened risk awareness with strategic asset allocation are likely to outperform in 2026.