This chapter examines asset allocation of insurers in 2024 and shows that bonds are dominant asset classes for insurers, representing more than half of their total assets. It then explains several factors that may have influenced asset allocation decisions of insurers. Finally, it analyses investment rates of return by type of domestic insurer and finds that the investment performance of insurers improved in 2024, thanks to a favourable financial market environment.
Global Insurance Market Trends 2025
Abstract
Bonds continued to be the dominant asset class for insurers, representing more than half of their total assets at the end of 2024 (Figure 4.1) (OECD, 2024[3]). Several factors may have influenced insurers’ asset allocation decisions, primarily the duration and predictability of insurers’ liabilities (Insurance Europe, 2014[17]), but also macroeconomic conditions such as interest rates and inflation, regulatory requirements and individual company investment strategies. Since life, non-life, and composite insurers have different liability structures, their asset allocation patterns naturally vary.
As a percentage of total investment
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Insurance Statistics
Life insurers generally follow a conservative investment approach in most reporting jurisdictions. Their liabilities are typically long-term and predictable, which encourages higher allocations to long-duration fixed-income instruments such as long-dated government and highly rated corporate bonds which help to hedge against interest rate risk. These investments help match long-term liabilities while ensuring a stable income stream. Life insurers also have relatively low liquidity needs, making investments in illiquid assets more feasible compared with non-life insurers. Consequently, they may also invest in infrastructure, real estate and private debt. In 2024, life insurers predominantly preferred conservative portfolios, focusing on fixed-income securities. On average, life insurers allocated 60.7% of their assets to bonds, 15.4% to Collective Investment Schemes (CIS), 10.2% to other investments (“Others”) and 6.8% to equities. Cash and deposits, and land and buildings accounted for smaller shares of total investments. However, there were notable variations at the country level. For instance, in Sweden, life insurers allocated 44.5% of their portfolios to equities, while bonds accounted for 33.6%. In Bulgaria, Austria, and Denmark, CIS were the primary asset, representing 57.1%, 53.0%, and 41.8% of total investments, respectively. In the Netherlands, life insurers invested 35.5% of their portfolio in “Others’’.
Non-life insurers also invested heavily in bonds, though their investment strategies reflected different liability structures. Non-life insurers have shorter-term liabilities and face greater uncertainty regarding the timing and amount of claims. Effective cash management is therefore crucial, and these insurers tend to favour highly liquid, short- to medium-term assets to maintain sufficient liquidity for claims. In 2024, non-life insurers allocated 52.2% of their assets to bonds and 11.9% to equities. They also held a larger share of cash and deposits – 11.2% compared with 4.4% for life insurers – to ensure liquidity for claim payments. Country-level differences were pronounced. In Iceland and Sweden, equities accounted for 35.0%, and 44.3% of non-life insurers’ portfolios, respectively. In Switzerland, other investments made up 44.0% of total investments, while in Türkiye and Guatemala, cash and deposits accounted for 54.4% and 45.0%, respectively.
Composite insurers mostly invested in bonds, like life and non-life insurers. Composite insurers have a mix of both long-term (life) and short-term (non-life) liabilities. For composite insurers, this might require balancing liquidity and long-term return generation needs. Risk appetite might vary widely depending on the dominant line of business and internal risk management approach. On average, composite insurers allocated 65.8% of their assets to bonds, followed by 9.1% to CIS, 8.9% to “Others” and 7.3% equities, while cash and deposits, along with land and buildings, accounted for smaller shares. In some countries, the allocation to “Others” was high; for instance, in Paraguay, “Others” accounted for 63.4% of composite insurers’ portfolios.
Compared with 2023, the non-life sector in several countries increased its allocation to the “Other” asset category, notably in Guatemala (by 18.7 p.p.). The life sector in some countries increased its exposure to “Others”, such as in the United States (by 4.7 p.p.) and Argentina (by 3.9 p.p.).
Insurer allocations to infrastructure did not change significantly in reporting jurisdictions that provided data on infrastructure investments (Table 4.1). In almost all reporting jurisdictions, except Peru, insurers had a low share of infrastructure investments in their portfolio. Some jurisdictions, such as Germany and Sweden, saw an increase in the allocations to infrastructure. By contrast, in some other jurisdictions such as Austria, the Netherlands and the Slovak Republic, insurers decreased their allocation to infrastructure in 2024.
Infrastructure investments (own account)/Total portfolio investments (own account)
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Insurance Statistics
Insurers achieved investment gains in 2024. Insurers recorded a positive real investment rate of return in 25 out of 35 jurisdictions (71%) in the life sector, 29 out of 41 jurisdictions (71%) in the non-life sector, and 19 out of 28 jurisdictions (68%) in the composite sector (Figure 4.2). Compared with 2023, the share of insurers achieving positive real investment returns increased across all three business types (OECD, 2024[3]). Several jurisdictions that experienced negative real investment returns in 2023 – such as Australia and Croatia – reported positive returns in 2024.
The real rate of return continued to vary significantly by country and business type. In the life sector, the highest real return was recorded in Norway at 6.1%, while Türkiye experienced the lowest at -22.9%. In the non-life sector, the highest real return was observed in Peru at 16%, whereas Türkiye again recorded the lowest at -13.4%. By contrast, in the composite sector, the variation in the real rate of return across countries was lower; the highest real return was recorded in Ecuador at 8.4% and the lowest observed in Brazil at -3.2%.
In per cent
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Insurance Statistics
Overall, the positive investment rates of returns of insurers in 2024 reflected a favourable interest rate environment and positive equity market performance in many jurisdictions. Strategic asset allocation decisions – including diversification into bonds, equities and real estate – also played an important role in shaping outcomes in some jurisdictions.
Equity and fixed-income market performance was the key driver of returns in many jurisdictions. For instance, in Australia, both life and non-life insurers benefited from the higher interest rate environment, which generated higher interest income, as well as from unrealised gains from interest-bearing investments (predominantly bonds) and equities. In Norway and Sweden, the investment gains of insurers were also attributed to favourable equity and fixed-income markets. Similarly, in Nicaragua, insurers benefitted from attractive returns on fixed-income instruments – comprising the bulk of insurers’ investment portfolios. Strategic asset allocation also supported investment performance in some jurisdictions. For instance, Ecuador reported that the high investment performance of composite insurers reflected a strategic investment approach tailored to the risk profiles and liquidity needs of different insurance business lines. According to Ecuador, composite insurers demonstrated the most diversified and higher-yielding portfolios.
By contrast, investment gains were lower in a few jurisdictions, for different underlying reasons. For instance, in Colombia, a reduction in the policy rate led to lower yields on fixed-income instruments and a sharp decline in overall investment returns in 2024, compared to 2023. In Slovenia, the low level of investment returns in the non-life segment was attributed to the extraordinary circumstances caused by the abolition of supplementary health insurance at the end of 2023. Due to increased capital and liquidity needs facing the company, the only insurer operating in this segment at year-end 2024 needed to dispose of certain investments, a development that resulted in a low level of investment returns.