Beyond asset gathering: Why institutional investors should look at speciality insurance

In a commentary article published by Alternative Credit Investor, Dan Adams, managing director of Arrow Global Insurance, contends that institutional investors should look beyond the well-established model in which insurers supply long-duration capital to alternative managers. Over the past decade, private credit and insurance-related assets have come to represent over 50 per cent of assets under management across large alternative investment managers, and that model has created stable fee streams and permanent capital for managers. Adams argues that this framing obscures a second opportunity, in which insurance is itself the investment strategy.

Adams distinguishes between two models. In the first, insurers' liabilities are backed by managed assets. In the second, investors underwrite specialist risk and earn returns from markets where expertise, judgment and access matter more than scale. He points to after-the-event insurance, contingent risk, tax insurance, warranty and indemnity insurance, surety and selected credit-related products as the most attractive areas, while explicitly excluding life insurance, annuities, catastrophe risk and commoditised consumer lines. He argues that buyers in these markets purchase cover to achieve commercial outcomes such as closing transactions, cleaner exits or released capital, which can support attractive margins where risks are well understood but mispriced or underserved.

The article highlights Europe as a particularly relevant environment. Citing Howden Re, Adams notes that the European MGA market exceeds €20bn (£17.1bn) of annual premium, that MGA premium has been growing at approximately 15 per cent annually, and that more than 650 MGAs operate across the region. He describes a fragmented market in which small MGAs and niche teams often have strong technical capabilities but lack the capital, infrastructure or distribution to scale, which he compares to prior opportunities in European private credit and real estate servicing. He notes that such opportunities are typically small and operationally intensive, requiring aggregation and long-term perspective.

Adams stresses that the return profile differs from traditional insurance-led private credit. Returns come from underwriting profitability, specialist origination and disciplined risk selection, with investment income on premium float as a secondary contributor. He cautions that insurance float remains policyholder money and that solvency capital and governance remain essential. For institutional investors, he presents the appeal as a combination of underwriting profit, origination and servicing fees, and float income, with underlying disciplines familiar to credit investors. He frames speciality insurance as a complementary diversifier rather than a replacement for private credit, while acknowledging that the sector is complex and carries risk.