An international survey of insurance investors has revealed that while appetite for private credit is growing, it is tempered by restraint.

Marsh’s Global Insurance Investment Survey shows that against a backdrop of increased geoeconomic risk, 58% of respondents are confident they can meet their investment returns and capital efficiency objectives.

About 86% of those surveyed are prioritising investment returns, while 62% cite capital efficiency, and diversification is important to 42%.

Diversification has been made possible by the expansion of high-quality, asset-backed investment opportunities and access routes such as evergreen funds, Marsh says.

Almost three-quarters of those surveyed say geoeconomic risk is one of their top three investment concerns, followed by credit risk defaults, interest volatility and market drawdown risk at 49%, 48% and 46% respectively.

Marsh says 57% of respondents expect to increase exposure to private credit over the next 12 to 24 months, ahead of public investment at 48%. This is a sharp increase on the 2024 survey. In that poll, 37% of insurers reported plans to increase allocations to core fixed income, while just 32% forecast increasing their allocation to investment-grade private debt.

“Private credit is a compelling opportunity for insurers, especially in the asset-backed space. Insurers can diversify away from corporate risk while realising meaningful yield pick-up over similar-rated, investment-grade public market bonds,” Mercer global insurance proposition leader David Morrow said.

The survey report points out that while the appetite for private credit is strong, there is a disciplined approach and due diligence is key.

About 54% of the 123 respondents worldwide say they are not meaningfully using AI in their investment businesses, while 29% use it for analysis of alternative data sets. The survey shows AI use increases relative to portfolio size.