Fitch Ratings has projected that life insurers’ investment portfolio mix will remain broadly stable in 2026, with solid credit quality and core fixed-income assets continuing to dominate.

This was indicated in the latest commentary on the insurance sector, which pointed out that insurers may increase exposure to private credit and alternative investments in the coming year.

According to the rating agency, the search for yield is expected to drive further expansion in private credit across multiple asset classes.

Fitch expects investment risk across the life insurance industry to increase modestly in 2026, stating, “We expect investment risk for the industry to increase modestly, but increased allocations to private credit and Level III assets are not expected to result in widespread rating pressure.”

Fixed-income assets are expected to continue accounting for approximately two-thirds of life insurers’ invested assets. Fitch noted that corporate bonds received the largest allocation at 41 per cent. The agency expects insurers to maintain a stable mix of public and private corporate bonds, with concentrations in financials, utilities, and consumer noncyclical sectors.

The rating agency also anticipates opportunistic portfolio repositioning. Insurers are expected to continue emphasising private placements due to their structural protections, while maintaining allocations to Rule 144A securities to preserve liquidity.

In the asset-backed securities market, Fitch expects life insurers to adopt a more risk-averse approach in 2026, citing ongoing stress in subprime auto loans and broader consumer headwinds.

These trends are likely to result in tighter underwriting standards and potentially lower issuance from subprime auto shelves.