Zurich eyes private debt allocation

Swiss-based insurer Zurich Insurance is preparing to make its first allocation to infrastructure debt.

Cecilia Reyes, Zurich’s global chief investment officer, said that the group had decided to make an allocation to infrastructure debt and was looking at opportunities linked to environmental, social and corporate governance (ESG), as reported by Asia Asset Management. The amount was undisclosed but Reyes indicated it would be significant. She also said that the insurer would rely on a third party asset manager with the appropriate expertise in the space.

The move is driven by the liquidity-risk premium that infrastructure debt investing demands, Reyes said. As a result of the illiquid nature of infrastructure debt, the premium can range from 150 to 300 basis points, depending on maturity, she said.

The long-dated nature of infrastructure debt also appeals to the insurer as the investment can be used to match liabilities. Zurich is also looking at other types of private debt allocations.

“In order to ensure optimal capital allocation, Zurich is evaluating opportunities to invest in some less liquid assets, including potentially direct lending to corporations, commercial real estate lending and infrastructure debt,” Roman Hess, a spokesperson for the group, told Private Debt Investor.

Zurich Insurance Company placed €500 million senior debt with European institutional investors earlier this month, which refinanced maturing senior debt. The notes are due September 2024 and the annual coupon is fixed at 1.75 percent.