Gallagher Re reports that institutional investors are increasing their allocations to insurance-linked assets, with a clear preference for structures offering scalability, transparency and direct access to underwriting returns. The new research, published by its capital markets sister company Gallagher Securities in a report titled "Unlocking Insurance Capital: The View from Investors", finds that 60% of surveyed investors plan to increase their exposure to insurance-related assets over the next two years, with almost none planning to reduce it. Catastrophe bonds remain the primary destination for new allocations, with 79% of respondents targeting the asset class. The report says cat bonds appeal due to their repeatable deal mechanics, clearly defined downside and post-loss transparency, allowing investors to scale exposure efficiently. Sidecars and structured balance sheet solutions also attract strong interest, with 53% of investors planning allocations in this area, providing alignment with underwriting performance and access to more tailored or less commoditised risk. Appetite for direct investments in insurance company equity or debt remains more limited, with only 21% of respondents targeting these strategies, reflecting the higher operational complexity and governance requirements associated with ownership structures. A further 13% of allocators plan to invest in Funds at Lloyd's. Jason Bolding, chief executive officer of Gallagher Securities, says: "We're in a market where capital wants access to high quality underwriting, and insurers want stable, scalable capacity. The value comes from building the bridge between the two." By line of business, property catastrophe remains the dominant area of interest, cited by 72.9% of respondents as a target for investment over the next 12 months. Cyber risk follows at 27.1%, with many respondents pointing to its growing presence in the cat bond market. Casualty is highlighted by 22.9%, life and annuities by 20.8%, and terrorism by 10.8%. The report identifies non-correlation with public markets as the highest-ranked driver of investor interest, followed by exposure to underwriting returns as a pure source of return, total return potential across cycles, diversification, and recurring income from fee-based business models. The findings draw on a quantitative survey of more than 60 large institutional investors familiar with insurance-related assets, of which 94% hold direct responsibility for allocation decisions. Some 72% manage more than US$1 billion, with 16% managing more than US$10 billion. Asset managers account for 85% of respondents, alongside participation from private equity, pension funds, family offices and private credit platforms. Among informed allocators, exposure is already significant: 56% of surveyed firms allocate over 25% of their portfolio to insurance-related assets. Even among investors with minimal current exposure, appetite is strong, with 57% of those currently allocating less than 5% planning to increase their allocation. On return expectations, allocators target annual internal rates of return (IRRs) in the low to high teens for portfolio and direct investments, with some aiming higher than 20%. Targets for catastrophe bonds and similar ILS structures sit in the high single-digit to low-teen range, while sidecars cluster in the mid-teens and Funds at Lloyd's targets sit in the mid-to-high-teen range. The report notes that low liquidity and a lack of transparency are the most-cited investor concerns, although several interviewed investors describe these features as integral to the opportunity rather than constraints to be removed. Gallagher Re says that as the investor base grows, so too does its sophistication, with greater emphasis on transparency, governance and structure-specific return expectations. The quantitative survey was conducted in the fourth quarter of 2025 and the qualitative interviews in the first quarter of 2026.
