Joe Pursley of Nuveen warns insurers data-centre exposure duplicates across five sleeves

A single data-centre asset can sit in an insurer's infrastructure book, its corporate credit portfolio, asset-backed securities, equity holdings and public high-yield allocation at once. Joe Pursley, head of insurance distribution for the Americas at Nuveen, called that redundant thematic concentration in artificial intelligence and data-centre infrastructure an underappreciated portfolio risk, in remarks at the ILS Bermuda Convergence conference.

Pursley urged allocators to supplement traditional strategic asset allocation with a bottom-up thematic audit to prevent accidental overexposure to AI infrastructure. AI data centres are financed through diverse channels, he said, which is how one asset ends up inside five separate allocations.

Rather than a small sub-allocation inside an alternatives bucket, institutions are structuring private fixed income as a core percentage of their overall fixed-income portfolios, Pursley said. Nuveen's latest annual survey of more than 200 institutional investors in the United States found 75 per cent of respondents plan to increase their private fixed income or private market allocations over the next five years, and nearly 50 per cent expect private fixed income to make up 20 per cent or more of total portfolio over the same period.

Fifty per cent of surveyed insurance companies named diversifying away from pure direct lending as their top priority over the next five years, Pursley said. To hold risk-adjusted returns without crowding into corporate loans, insurers are turning toward alternative illiquidity and complexity, according to his remarks.

Nuveen manages approximately $1.4 trillion and engages daily with chief investment officers across the insurance industry to track capital allocation trends. The firm published a paper in August giving general accounts a framework for how AI-driven power demand is redrawing utility, generation and grid credit, per ICD's records.