Since 2016, the industry has trimmed its reliance on long-term bonds, with allocations sliding from 80% to 72% of total invested assets. In their place, firms are increasingly turning toward commercial mortgage loans and Schedule BA assets. Structured securities now command 26% of industry bond portfolios, though usage varies significantly between annuity providers and traditional life insurers, with the former showing a clear preference for these complex instruments.

Matt Reilly, Managing Director and Head of Insurance Solutions at Conning, notes that investment strategy is becoming a primary differentiator in a crowded market. Insurers now face the friction of balancing aggressive return objectives against the rigid requirements of asset-liability management and capital efficiency. As portfolios trend toward less liquid assets, the firm advises that success will depend on disciplined governance and a rigorous approach to risk management that keeps investment capabilities aligned with evolving liabilities.