Insurance companies constitute a sizeable proportion of the real estate institutional investor landscape. The assets under management of insurance companies active in real estate totalled $13.2tn, representing 26% of the $50.2tn total assets under management of all LPs currently allocating to real estate. A number of insurance companies with combined total assets under management of $800bn are also considering making maiden investments in real estate.

Thrity seven percent of insurance companies have less than $10bn in total assets under management, 34% have between $10-49.99bn, and 29% have $50bn or more in total assets. An example of a large insurance company that commits to private real estate funds is R+V Lebensversicherung. This German insurance firm with 65bn in total assets, has 1.4bn invested in private real estate funds.

As of January 2012, the average allocation to real estate of these insurance companies was 6.6% of total assets; however the target allocation to real estate amounted to around 9.9%. Of the 223 insurance companies that invest in real estate tracked by Preqin, 67% invest or are considering investing in direct real estate, 61% invest or are considering investing in private real estate funds, and 18% invest in listed property.

In terms of overall allocations to real estate, 40% of insurance companies have less than $500mn invested in the asset class. Around 16% have real estate portfolios worth between $500-999mn, with 28% of insurance companies investing between $1bn-4.99bn. A sizeable 16% of insurance companies have allocated over $5bn to the real estate asset class, demonstrating the ability and scope of such investors to build and maintain expansive real estate portfolios. An example of an insurance company with a significant allocation to real estate is BNP Assurances. Its $5.1bn real estate portfolio is split 60% to direct real estate, 10% to listed real estate and 30% to private real estate funds.

The geographical distribution of insurance companies is quite varied, with 24% based in North America. The majority of insurance companies that invest in real estate are located in Europe (54%), with 22% located in Asia and Rest of World.

Insurance companies have a strong preference for value added vehicles with 60% of firms stating a preference for this strategy, while 57% have exhibited an interest in core funds. 51% of insurance companies also give strong consideration to opportunistic strategies. CIGNA, a $46bn US-based insurance firm, invests across direct, listed, and private real estate. The insurance company has a preference for core, core-plus, opportunistic, value added, and debt strategies, and has a regional preference for North America. Distressed and fund of funds strategies are least favoured by insurance companies.