Real-assets resilience finds a natural buyer in the general account

"The Return of Real Assets," a new essay from Insurance AUM Journal, opens with a claim: Western economies have used up a thirty-year efficiency regime. The catalog of what broke it runs from the pandemic and Russia's war in Ukraine to strategic competition with China and disruptions in the Middle East. The verdict: the next decade belongs to resilience, and capital will flow to the physical capacity that supports it.

The list covers defense production and semiconductors, critical minerals and battery manufacturing, energy generation and electrical grids, transportation networks and domestic industrial capacity. AI spending is pulling demand for power, land, steel, cooling systems, chips, transformers, and transmission. The efficiency model kept design, brands, software, and customer relationships close while sending production, inventory, labor, and commodity exposure to the cheapest location available. That logic was sound when inflation was low, transport was cheap, trade was open, and geopolitics calm. Now the world has changed, but the benchmarks have not.

The benchmark argument hits general accounts directly. Index weightings still mirror the capital-light economy of the past three decades, and the essay says that leaves passive investors underexposed to the resilience trade. Some insurers manage against benchmarks; others manage against actuarial liability streams. The second group has an easier time accepting the shift. The first group sees a move into ports, pipelines, and grids as a deliberate tilt away from the index—one that requires conviction the index does not yet share.

The essay defines real assets as businesses that own or operate essential physical things: mines, energy systems, pipelines, ports, railroads, power infrastructure, industrial facilities, real estate. The fit with insurance liabilities is straightforward. Long-duration, inflation-sensitive lines—annuities, workers' compensation, long-tail casualty—want income that moves with prices. A port or a power line earns from physical demand, not from financial conditions. In a capacity-constrained world, pricing power is an inflation pass-through, and insurers have the duration to wait for it.

The resilience thesis supplies a story that makes a slow drift—infrastructure allocations rising in steps rather than leaps—defensible to boards and analysts. It arrives as general accounts have already spent energy on emerging-market credit as a country-selection game and on agency MBS with thinning carry. Real assets are another answer to the same problem: income that keeps up with prices. But friction sits in the structure. Insurance capital is rated, regulated, and reviewed; private real assets are illiquid, consuming scarce lockup capacity. Investment committees move at the speed of board risk appetite and capital charges, not the speed of essays.

There is a catch the article does not address, since it is written from an equity perspective. Pricing power accrues to the owners of advantaged assets—the equity side of the structure. Insurers mostly occupy the debt side of infrastructure, where participation is a coupon and a lien, not a share of the pricing power. The resilience premium will likely show up in sponsors' internal rates of return while fixed-income investors see it as spread compression. That still helps a general account, but the value has to be bought, not merely owned.

The efficiency machine ran on the assumption that essential inputs would always be cheap and available. The past few years have repriced that assumption, and insurers are in the business of repricing assumptions. A general account that reaches for real assets before its benchmark does is betting that resilience is sticky—that semiconductors, power, and freight will matter more than the margins of the software that orders them. For a yield-hungry bond buyer, that is not a macro forecast. It is a liability match.