Alternative investments now central to insurance portfolios: Clearwater Analytics

Clearwater Analytics (CWAN), a provider of investment management technology, has published new research indicating that alternative investments have moved from a niche strategy to a key part of insurance portfolios.

These assets now make up almost one third of the US insurance industry’s total holdings, estimated at around $2.7 trillion, as insurers shift away from traditional investment approaches.

The report, “Are ‘Alternatives’ Still Alternative?”, brings together industry-wide NAIC data with analysis from about 400 Clearwater Analytics clients, representing a combined total of $4.4 trillion in assets. It provides detailed insight into the extent and pace of alternative investment adoption across the insurance sector.

The study points to a lasting change within the industry. Assets once considered non-traditional have become a structural feature of insurance portfolios. Private credit, including privately placed bonds and mortgage loans, now represents the largest share of alternative allocations.

CWAN’s data also shows that outdated technology systems are struggling to support the increased complexity of these investments, taking three to five times longer to process than conventional assets.

Data from CWAN’s platform highlights notable differences in how insurers are allocating to alternatives, showing an uneven rate of adoption across the market. The report also explores how post-pandemic market shifts have permanently influenced portfolio structures and investment priorities.

“What this research shows is that alternatives have moved from the periphery to the core of insurance portfolios, they’ve already won,” added Kirat Singh, President, Risk and Alternative Assets, CWAN.

“What we’re seeing with our clients is leading insurance companies shifting capital to privates and alts, some at 35% while others going as high as 70-80%. The real challenge now is operational, and having an open, scalable technology infrastructure becomes essential to handle this complexity.”

The analysis draws on CWAN’s proprietary platform, which supports more than $10 trillion in global assets. It reveals wide variation in exposure levels, with some insurers holding only a small proportion of alternatives and others exceeding half their portfolios. Despite these differences, the findings confirm a strong structural trend driven by the pursuit of diversification, consistent returns and better alignment with liabilities.