Introduction to Private Markets Expansion in Insurance

Insurance firms are aggressively expanding into private markets in 2026, driven by the need for higher yields amid low interest rates and volatile public markets. Continuation vehicles and evergreen funds have emerged as key tools, allowing insurers to extend asset life cycles, recycle capital, and access illiquid opportunities with more flexibility. This shift is reshaping investment portfolios, with property & casualty (P&C) and life insurers leading the charge into alternatives like private credit and equity.

In 2026, insurers' managed assets have surged, with private placements comprising over 21% of total assets under management (AUM). This expansion addresses legacy exposures while targeting 12-15% allocations to private credit and 6-8% to private equity in general insurance portfolios. Partnerships with alternative managers like CVC and Onex highlight this trend, injecting billions into secondaries and credit strategies.

What Are Continuation Vehicles?

Continuation vehicles enable general partners (GPs) in private equity to transfer mature assets from aging funds into new structures, providing liquidity to limited partners (LPs) via secondary sales while allowing GPs to hold winners longer. For insurers, these vehicles offer a way to manage legacy private equity exposures without forced sales in down markets.

In practice, a GP might move a portfolio of high-performing companies from a fund nearing its end into a continuation vehicle. Insurers invest fresh capital, gaining preferred returns and downside protection. This structure has gained traction in 2026 as private equity secondaries normalize, with accelerated growth expected. Half of first-time funds in 2025 targeted lower middle markets, creating opportunities for continuation plays in SMEs and thematic sectors like healthcare.

Benefits for Insurance Firms

• Extended Holding Periods: Hold assets 2-3 years longer for value realization.
• Liquidity Management: Sell interests in underperformers while retaining winners.
• Yield Enhancement: Access private market returns of 10-15% vs. traditional fixed income.

P&C insurers, in particular, are ramping up alternatives allocations significantly in 2026, viewing them as the next frontier for AUM growth.

The Rise of Evergreen Funds in Insurance Portfolios

Evergreen funds provide perpetual structures with periodic liquidity windows, blending illiquid private assets with semi-liquid features. Unlike closed-end funds, they allow ongoing subscriptions and redemptions, appealing to insurers seeking diversification without full commitment lockups.

By 2026, evergreens represent about 5% of private markets ($700 billion), projected to hit 20% in a decade. Insurers like AIG are cornerstone investors in platforms such as CVC's private equity secondaries evergreen, committing up to $1.5 billion alongside $2 billion in SMAs and credit funds. This moves them toward targeted allocations while transitioning legacy real estate into higher-yield strategies.

Key Features of Evergreen Structures

• Hybrid Liquidity: Quarterly or annual redemptions, often via secondaries.
• Diversification: Across PE, credit, real estate, and infrastructure.
• Retail-Institutional Appeal: Joint ventures with wealth managers open doors to $3 trillion in private wealth by 2030.

Institutional insurers appreciate evergreens for real estate, special situations, and illiquid credit, while regulatory easing boosts access via 401(k)s and ELTIFs/LTAFs.

Strategic Partnerships Driving Expansion

Insurance firms are forging deep ties with alternative managers. AIG's deals exemplify this: up to $2 billion with Onex in CLOs and syndicated loans, rolling divestiture proceeds into alternatives. CVC raised €15 billion from insurers over five years, with 25% of its €10.4 billion fund from insurance clients.

Convergence is evident in PE acquisitions of life/annuity entities and minority stakes. Apollo and Brookfield target insurers for capital pools, while sidecars and private credit deals proliferate. In Asia, M&A activity surges post-2025 slowdown, fueled by sponsor investments.

These alliances help insurers diversify beyond core bonds, with private placements at 21.1% of $4.5 trillion AUM in 2024, growing further.

P&C Insurers: The Next Frontier

P&C insurers lead 2026's push into alternatives, decelerating premium growth but facing secondary perils and cyber risks. Allocations to privates rise sharply, with agility key to competitive edges. Conning's outlook notes asset diversification and investment model convergence in life/annuity, spilling into P&C.

Legacy private equity transitions via continuation vehicles free capital for credit strategies yielding mid-teens returns. Distribution consolidation—PE buying agencies at 9-11x EBITDA—frees insurer balance sheets for privates.

Life and Annuity: Convergence with Private Equity

Life insurers model as tax-efficient vehicles, partnering for PE expertise. Offshore reinsurance and guaranteed income products drive alternative hunger. In 2026, sidecar activity rises for incremental capital, blending insurance with private capital.

Risks and Regulatory Considerations

Expansion isn't risk-free. Liquidity concerns in private credit persist, alongside minimal oversight. U.S. regulators scrutinize capital charges for structured products and AI use. Flood/fire-prone regions challenge personal lines availability.

Insurers mitigate via networks: partnerships with wellness providers like Genworth's homecare venture diversify revenues. Data personalization and proprietary products differentiate in softening markets.

Risk Management Strategies

• Portfolio Limits: Cap privates at 15-20% initially.
• Liquidity Buffers: Use evergreens' redemption features.
• Due Diligence: Vet GPs on track records in secondaries/credit.

Actionable Insights for Insurance Executives

1. Assess Portfolio Gaps: Audit legacy assets for continuation vehicle fits—target 10%+ IRR thresholds.

2. Pilot Evergreen Allocations: Start with $500M commitments to diversified platforms like CVC's.

3. Forge Partnerships: Negotiate cornerstone roles for preferred terms and co-investment rights.

4. Leverage Tech: Deploy AI for deal sourcing and risk modeling in privates.

5. Monitor Regs: Track 401(k) expansions adding $900B potential.

Sample Python script for simulating evergreen fund cash flows

def evergreen_cashflow(initial_investment, annual_return, redemption_rate, years): portfolio = initial_investment for year in range(years): portfolio *= (1 + annual_return) redemption = portfolio * redemption_rate portfolio -= redemption print(f"Year {year+1}: Portfolio ${portfolio:,.0f}, Redemption ${redemption:,.0f}")

Example: $1B investment, 12% return, 10% annual redemption

evergreen_cashflow(1000000000, 0.12, 0.10, 10)

This script models perpetual growth with liquidity, mirroring 2026 evergreen dynamics.

Future Outlook for 2026 and Beyond

Private markets will redefine insurance investing, with $3T from wealth channels and regulatory tailwinds. M&A builds, exits functionalize, and LPs recycle via secondaries. Insurers agilely executing on continuation vehicles and evergreens will capture alpha, funding innovation amid uncertainty.

Group insurance growth slows post-2024 peak, pushing alternatives harder. Specialty finance, infrastructure, and energy transition beckon. By embracing these vehicles, insurers not only boost yields but fortify resilience in a transforming landscape.