Investment decision-makers surveyed after U.S. elections in November last year ranked the domestic political environment as their top portfolio concern for the year ahead, bumping concerns about inflation to the bottom of the list.

According to a summary of the fourth annual “Risk Assessment Survey of Insurers” published by insurance asset management firm Conning, inflation ranked as the No. 1 worry of property/casualty and life insurance investment professionals in all three of the previous surveys.

This year, the 310 investment professionals surveyed ranked inflation seventh among 10 potential risks on their minds as they make investment decisions, according to a summary of the report provided to the media. Falling behind the domestic political environment in the No. 1 spot, portfolio yields and market volatility were tied as insurers’ second greatest investment concern for 2025.

Still, 77 percent of the insurance professionals surveyed for the latest report said they remain optimistic about the 2025 investment environment—down only slightly down from 80 percent in the prior survey.

Insurers didn’t express a flood of interest in any particular asset category, Conning said, noting that this is a departure from the prior survey. Nearly two-thirds of respondents to Conning’s 2023 survey (63 percent) had expected to increase exposure to investment-grade fixed income. In the latest survey conducted in late 2024, none of the 12 asset classes listed saw more than 47 percent of insurers expecting to add exposure. Instead, insurers generally indicated “no change” or “decrease” options for the various classes.

“A greater level of uncertainty has likely led to greater restraint in insurers’ investment planning,” said Matt Reilly, managing director and head of Conning’s Insurance Solutions group and author of the survey report, in a media statement. “However, insurers still expect to increase investment risk, expanding beyond their more traditional fixed income portfolio holdings to include greater exposure to private assets, in order to achieve yield and diversification.”

Seventy-one percent of respondents said they currently hold between 5 percent and 20 percent of their portfolios in private markets; 63 percent expect to have between 10 percent and 25 percent in private assets in the next two years.

Private assets are not without their own risks, however, and chief among them is their impact on liquidity with 31 percent of insurers saying they are “very concerned.” The liquidity concern is notable as insurers stated they were very comfortable with liquidity overall—92 percent, in fact, said they are generally confident that their companies are well positioned to meet liquidity needs in the year ahead.

The majority of respondents also said they expect to maintain or increase duration in 2025.

Source: Conning