Australian insurers have a growing investment risk appetite led by the pursuit of private markets, according to the 2025 Australian Insurance Report by Janus Henderson Investors.
The report, which captures insights from 20 leading insurance firms across general, life and health sectors, reveals 47% plan to increase investment portfolio risk in the next 12 months. For insurers currently underweight their risk budgets, 70% intend to increase risk exposure over the coming year.
This shift comes amid easing inflationary pressures and a stabilising economic environment, prompting insurers to explore new avenues for yield and diversification. Geopolitical events now outweigh inflation and recession concerns with eight in 10 (82%) insurers having reviewed or are currently reviewing their strategic asset allocation.
To unpack these trends, Janus Henderson Investors has held its third annual Insurance Symposium in Sydney. The event brought together Australia’s top insurance investment decision-makers to discuss the evolving risk landscape, strategic asset allocation, and the role of private markets in portfolio construction.
Also read: Australian Economic View – August 2025 – Janus Henderson
Key findings from the report:
- Private credit leads fixed income innovation: 55% of insurers already hold exposure to private credit, primarily through global direct lending. Asset-backed lending (ABL) is gaining traction due to its collateral-driven risk management and shorter duration profile.
- Unlisted infrastructure and short-duration corporate credit on the rise: Insurers are increasingly turning to unlisted infrastructure and short-duration fixed-rate corporate bonds to enhance returns and reduce reliance on traditional beta.
- Risk budget dynamics: Highlighting a conservative stance amid market volatility and regulatory constraints, half of the surveyed insurers were underweight their risk budgets, up from 40% in 2024.
- ESG integration and AI adoption: Nearly 90% of insurers now incorporate environmental, social and governance (ESG) factors into their portfolios, driven by corporate policy and social impact. One in eight insurers (12%) currently incorporate artificial intelligence (AI) into their investment processes, with a further 27% undertaking some form of AI pilot study within the next 12 months – a four-times uplift from 2024. To date, application amongst insurers has been primarily aimed at improving operational efficiency, with investment strategy applications expected to grow.
- Forward-looking themes for 2025: Insurers are focused on enhancing credit allocations, diversifying private credit exposure beyond direct lending into asset-backed lending (ABL), and hedging credit spread risk using low beta strategies and dynamic overlays such as credit default swaps (CDS).
Matt Gaden, Head of Australia at Janus Henderson Investors, said:
“Insurers are clearly shifting gears. The move from defensive positioning to proactive portfolio re-risking reflects a broader industry trend toward embracing private markets and seeking differentiated sources of return. Private credit is emerging as a cornerstone of fixed income strategy, offering both yield and diversification.”
The symposium explored how insurers can weather both geopolitical and macroeconomic volatility, as well as structures for private credit allocations. It also provided a platform for insurers to share strategies and collaborate on navigating regulatory and internal stakeholder risk management.
