Key Takeaways
- • ALIRT Insurance Research reports that Schedule BA alternative investment assets across its U.S. Life Insurance Industry Composite rose from approximately $74 billion in 2005 to $374 billion as of June 30, 2026.
- • Alternative investments grew from 3.1% to 7.0% of life insurers' invested assets over the two-decade period, according to the report.
- • Alternative assets generated higher yields than traditional bonds and mortgage loans over the past two decades and continued to provide yield advantages through 2025, though returns have moderated since 2021.
- • Exceptionally strong 2025 growth was partly driven by NAIC bond reporting changes effective in 2025, which moved certain debt securities that no longer met the revised bond definition into Schedule BA.
- • The report flags higher valuation volatility from equity market sensitivity and fair-value accounting, while noting exposure remains manageable as alternatives are a limited share of invested assets for most insurers.
Summary
ALIRT Insurance Research released a report on October 27, 2026 examining U.S. life insurers' exposure to alternative investments reported through Schedule BA of statutory financial statements. The analysis covers growth trends, portfolio composition, investment performance and regulatory changes affecting alternative asset holdings across the sector.
According to the report, life insurers have steadily increased their allocations to alternatives over the past two decades in pursuit of diversification and enhanced returns. Schedule BA assets within the ALIRT Life Insurance Industry Composite increased from approximately $74 billion in 2005 to $374 billion as of June 30, 2026, rising from 3.1% to 7.0% of invested assets.
The report states that alternative investments have generally delivered higher yields than traditional bonds and mortgage loans over the past two decades. Returns have moderated since the exceptional performance seen in 2021, but alternatives continued to provide yield advantages through 2025.
The report also addresses risk. Alternative asset valuations can be more volatile given their sensitivity to equity markets and their use of fair-value accounting. ALIRT nonetheless characterizes industry exposure as manageable, since alternatives account for a relatively limited share of total invested assets for most life insurers. Alternative holdings are concentrated among larger insurance organizations with greater investment expertise than smaller counterparts.
The report reviews the effect of National Association of Insurance Commissioners (NAIC) bond reporting changes effective in 2025. Those changes moved certain debt securities that no longer met the NAIC's revised bond definition into Schedule BA, contributing to the exceptionally strong growth in reported alternative holdings in 2025.
Looking ahead, the report notes continued industry interest in alternatives, supported by significant committed capital and the potential for higher returns relative to traditional fixed income. Insurers must balance that enhanced yield against greater market volatility and the capital requirements associated with certain alternative investments.
According to the report, life insurers have steadily increased their allocations to alternatives over the past two decades in pursuit of diversification and enhanced returns. Schedule BA assets within the ALIRT Life Insurance Industry Composite increased from approximately $74 billion in 2005 to $374 billion as of June 30, 2026, rising from 3.1% to 7.0% of invested assets.
The report states that alternative investments have generally delivered higher yields than traditional bonds and mortgage loans over the past two decades. Returns have moderated since the exceptional performance seen in 2021, but alternatives continued to provide yield advantages through 2025.
The report also addresses risk. Alternative asset valuations can be more volatile given their sensitivity to equity markets and their use of fair-value accounting. ALIRT nonetheless characterizes industry exposure as manageable, since alternatives account for a relatively limited share of total invested assets for most life insurers. Alternative holdings are concentrated among larger insurance organizations with greater investment expertise than smaller counterparts.
The report reviews the effect of National Association of Insurance Commissioners (NAIC) bond reporting changes effective in 2025. Those changes moved certain debt securities that no longer met the NAIC's revised bond definition into Schedule BA, contributing to the exceptionally strong growth in reported alternative holdings in 2025.
Looking ahead, the report notes continued industry interest in alternatives, supported by significant committed capital and the potential for higher returns relative to traditional fixed income. Insurers must balance that enhanced yield against greater market volatility and the capital requirements associated with certain alternative investments.
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