@Invesco
This marketing communication is for professional investors only.
European insurers enter 2026 facing a challenging investment backdrop marked by macroeconomic uncertainty and evolving regulatory frameworks. While the global economy held up in 2025, questions persist: Will central banks cut rates too aggressively and reignite inflation, or move too slowly and risk a downturn? Add to this the potential impact of tariffs and geopolitical tensions, and caution becomes essential.
Fixed income remains a core allocation for insurers, supported by strong fundamentals. Yields declined significantly in 2025, with the 10-year US Treasury falling below 4%. European investment-grade yields hover near 3%, while UK yields sit in the low-5% range. Despite attractive all-in yields, spread duration risk is skewed to the upside, reinforcing the need for a defensive posture.
Beyond public credit, private markets offer compelling opportunities for diversification and yield enhancement. Private credit continues to hold an overweight position thanks to seniority in capital structures and reasonable spreads over liquid credit. Commercial real estate debt, despite sector headwinds, presents favourable risk-adjusted returns. Conversely, private equity warrants caution: high valuations and elevated financing costs limit upside potential.
European and UK reforms are reshaping portfolio strategies. Upcoming Solvency II revisions (2026–2027) aim to reduce capital charges for high-quality securitisation and improve treatment of infrastructure and long-term equity exposures—positioning senior structured credit as an attractive, capital-efficient option. In the UK, PRA’s Matching Adjustment reforms and the MA Investment Accelerator expand access to illiquid assets, accelerating deployment into structured credit and private markets. These changes align with growing pension de-risking and bulk annuity volumes, reinforcing insurers’ appetite for resilient, yield-generating strategies.
Bottom Line: 2026 will likely be another challenging year for insurance investors. Opportunities remain—particularly in private credit and structured solutions—but full valuations and macro uncertainty call for disciplined risk management and a defensive posture.
Investment Risks
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Important information
This marketing communication is exclusively for use by professional investors in Continental Europe as defined below, and Professional Clients in Dubai, Ireland and the UK. For Professional Clients, Exempt Investors, Accredited Investors or Non-Natural Qualified Investors in the Middle East. It is not intended for and should not be distributed to the public.
For the distribution of this communication
- Continental Europe is defined as Austria, Belgium, Denmark, Finland, France, Germany, Italy, Liechtenstein, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden and Switzerland
- The Middle East is defined as Bahrain, Qatar, Oman Kuwait, Saudi Arabia and United Arab Emirates.
Data as at 26 November 2025, unless otherwise stated. By accepting this material, you consent to communicate with us in English, unless you inform us otherwise.
This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Views and opinions are based on current market conditions and are subject to change.
Issued by: Invesco Management S.A., President Building, 37A Avenue JF Kennedy, L-1855 Luxembourg, regulated by the Commission de Surveillance du Secteur Financier, Luxembourg; Invesco Asset Management, (Schweiz) AG, Talacker 34, 8001 Zurich, Switzerland; Invesco Asset Management Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority; Invesco Asset Management Limited, Index Tower Level 6 - Unit 616, P.O. Box 506599, Al Mustaqbal Street, DIFC, Dubai, United Arab Emirates. Regulated by the Dubai Financial Services Authority.
EMEA5025869/2025
