Infrastructure Debt: The Long Game
Helping insurers deliver value to policyholders, shareholders and the world we live in through infrastructure debt.
The new U.K. Labour Government has designated economic growth as its defining mission, and infrastructure is a key engine for achieving it. The Government is expected to announce a 10-year national infrastructure strategy in the spring which will cover its plans for transport, energy, housing and social infrastructure. However, much of the U.K.’s infrastructure needs will have to be funded by private sector investment—which presents a significant opportunity to insurance investors. More broadly, we see similar demand for infrastructure investments across the rest of Europe and in the U.S.
Meanwhile, as capital providers, U.K. insurers’ growing use of and interest in infrastructure debt is no surprise. In addition to allowing insurers to invest their capital productively and sustainably, infrastructure debt presents an appealing quantitative case. The asset class delivers stable cash flows, backed by steady income streams, generated by underlying assets which are resilient throughout economic cycles. In recognition of these defensive characteristics, the asset class enjoys favourable capital treatment under Solvency II, making it an efficient allocation for insurers.
With the U.K. Pension Risk Transfer (PRT) market expected to reach £40-50 billion in 2025, the demand for long-term assets shows no sign of slowing.1 In this piece, we take a look at why infrastructure debt is a natural fit for insurers, and explore the best ways for insurers to access global investment opportunities in order to deliver value for their policyholders, shareholders and the world we share.
1. Source: LCP. As of January 2025.
