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The new architecture of institutional credit: Why UK insurers are taking notice.
As UK insurers increasingly look to diversify fixed income allocations, Nuveen's latest research paper The New Architecture of Institutional Credit presents a timely analysis of the evolving credit landscape.
Focusing on four structural changes shaping credit’s next era, it makes the case that investors must move beyond historical asset class silos and embrace the full opportunity set with an integrated, agile approach.
Re-establishing public credit's structural role in institutional portfolios
According to Nuveen’s data, 60% of UK insurers plan to increase their private fixed income allocations over the next two years, and 70% aim to boost private market investments over the next five years. The research also showed that alongside this growing interest in private markets, investors are re-engaging with public fixed income. Rising rates have led many to reassess and increase public credit exposure.
Constructing credit portfolios with an open floorplan
Rather than viewing public and private credit as distinct alternatives, investors are embracing increasingly flexible approaches that consider opportunities across both spaces.
Commercial real estate exposure, for example, can be captured through publicly available CMBS – commercial mortgage-backed securities – or through private options such as direct real estate debt or specialist finance for clean energy upgrades.
This is just one example of the broader toolkit enabling investors to fine-tune their portfolios beyond conventional levers such as duration, rating, or sector.
Reengineering how credit gets delivered
Investors and asset managers are welcoming innovation in financial product design to improve efficiency, accelerate deployment, and serve shifting client demands.
Noteworthy for insurers are how regulatory developments, such as Solvency II, are driving change, and how asset managers are responding with capital-efficient investment structures. As one UK insurer observed in the research: "With the rules around matching loosening as a result of Solvency UK, it gives us more opportunity to look at things in private credit that we hadn't previously, particularly in US markets."
Executing with agility in a unified framework
To capitalise on the opportunities in today’s credit markets, credit market participants are rethinking team structures and emphasising tactical responsiveness. For UK insurers, this paper offers valuable insights into portfolio construction, risk management, and operational considerations.
