Volatile economic conditions, including a trade war in North America, raise concerns for specialists managing insurance company investment portfolios worldwide, says new research from Goldman Sachs Asset Management.
The Wall Street firm’s Global Insurance Survey 2025 was answered by chief investment officers and chief financial officers globally at insurance companies. Of the 405 total respondents, 119 work in property and casualty (P&C) and other non-life lines. Another 22 work in reinsurance and four are at captives.
While inflation (52%), a potential U.S. recession (48%) and volatile credit and equity markets (47%) are the most pressing concerns for insurance investment managers, global tensions (43%) and tariffs and trade disputes (32%) round out the survey’s Top 5.
“We expect policy uncertainty – especially trade – to pose significant headwinds to global growth this year,” notes Goldman Sachs chief economist and global research head Jan Hatzius.
For example, the firm’s 2025 U.S. economic growth outlook is currently 1.7%. That’s below consensus compared with other Wall Street investment houses and based on Goldman’s forecast that inflation will increase to 3% “on the back of higher tariff rates.”
Tariff troubles
New levies on Canadian goods imported into the U.S., both formalized and threatened, are of particular concern above the 49th parallel. The Bank of Canada’s governor recently said efforts by U.S. President Donald Trump to change the trade calculus have the potential to “wipe out” Canadian economic growth for the next two years.
In response, Canada should seek to diversify trade with the European Union, Britain and Japan, says the director of the U.S.-based Wilson Center’s Canada Institute. In the short-term, Canadians should forge ahead with counter-tariffs, Christopher Sands, director of the Canada Institute, told a recent Global Risk Institute webinar. One key reason? The U.S. President would not respect Canada if it didn’t stand firm against his use of tariffs, he said.
“I would add Britain to that mix, because Britain is both an important defense ally outside the European Union, but, like Canada, alienated from the block next door, which is [the] big market it traditionally relies on,” he said. “There’s some common cause between Britain and Canada, which I think is important.”
Where insurers are investing
Amid a panoply of economic woes, insurers are exploring alternative investment opportunities to ensure capital is on hand to pay claims. Among those investments, private credit has gained traction as a diversification tool that offers good risk-adjusted returns.
While somewhat different from fixed-rate investments like bonds that insurers rely on to generate cash for client claims and other obligations, private credit instruments do offer return assurances that can cover their obligations to customers.
Asked which asset classes will offer the highest investment returns over the coming year, respondents ranked private credit (61%), U.S. equities (57%), private equity (55%), secondary market private equity (30%) and high-yield debt (28%) as the Top 5.
Further, 58% of insurance company investment managers say they’ll increase private credit investments, while 23% say they’ll maintain current investment levels. Only 2% of respondents plan to decrease private credit investments and 17% say they don’t hold positions in those instruments.
Insurers in the Americas report they’re most likely to increase investment allocations in private credit (64%), followed by asset-based finance (58%).
“Asset allocators are reassessing their fixed income strategies, with private credit providing insurers an opportunity to invest amidst market volatility and benefit from increased lender protections,” says Kevin Sterling, Goldman Sachs’ head of asset finance and investment grade private credit.
“Asset finance, as an asset class, provides diversification beyond corporate credit [and offers] attractive spread premiums and customizable duration to align with liability requirements.”
Related: Tariffs: Will they stop cross-border brokerage M&A activity?
Feature image by iStock/Moor Studio
