In this episode of Critical thinking, Amit Popat, Global Head of Financial Institutions at Mercer, is joined by David Morrow, Head of Insurance, and Stephanie Thomes, a Senior Investment Strategist in Mercer’s Insurance team, to explore Mercer’s outlook for insurers in 2025. This year’s paper reflects a transitional phase for the economy, defined by shifts in structural factors such as monetary policy, geopolitical uncertainty, and technological and regulatory innovation that requires a broader and longer perspective. These challenges will require thoughtful navigation, particularly for investors with a longer-term investment horizon, such as insurers.

Key takeaways include:

How investment risk can serve as a stabilising force for insurers: When underwriting results are under pressure from increased claims and reduced premium income, investment risk can be strategically advantageous because there’s limited correlation between economic cycles and underwriting cycles. While underwriting performance is influenced by market conditions and competitive dynamics, investment returns can provide a stabilizing effect.
What strategies insurers can adopt to navigate a challenging environment, where recent fluctuations in interest rates have affected bond-oriented portfolios: There is considerable uncertainty about the direction of travel for markets in general, so insurers should consider modelling how their portfolios would perform under various scenarios, and to increase diversification, within the confines of acceptable risk and regulatory capital constraints.
How the growing number of semi-liquid and evergreen fund structures in private markets is changing the landscape for insurers: As private markets continue to evolve to meet the news of their investor base, semi-liquid and evergreen funds make it easier for small investment teams to participate in private markets, making it easier to maintain a target percentage allocation, relieve some of the administrative and operational burden of re-ups, and can relieve blind pool risk.

This content is for institutional investors and for information purposes only. It does not contain investment, financial, legal, tax or any other advice and should not be relied upon for this purpose. The materials are not tailored to your particular personal and/or financial situation. If you require advice based on your specific circumstances, you should contact a professional adviser. Opinions expressed are those of the speakers as of the date of the recording, are subject to change without notice and do not necessarily reflect Mercer’s opinions.

This does not constitute an offer or a solicitation of an offer to buy or sell securities, commodities and/or any other financial instruments or products or constitute a solicitation on behalf of any of the investment managers, their affiliates. For the avoidance of doubt, this is not formal investment advice to allow any party to transact. Additional advice will be required in advance of entering into any contract.

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Insurance Considerations 2025