Investments

Market Context 

The Rise of Private Capital

For most of the 20th century, public markets and traditional banks served as the primary conduits for capital. In recent years, however, private capital has ascended from a niche alternative to a powerful force for financing and growth—especially for middle-market companies and businesses seeking greater flexibility than traditional lenders or public markets can offer. 

Post-Global Financial Crisis, regulatory pressures on bank balance sheets and reduced dealer capacity have further amplified this shift, steering both investors and borrowers towards private credit as a robust alternative to the public sphere. This shift is not temporary; it reflects enduring structural forces. Investors are seeking differentiated return streams, control, and better alignment of risk and incentives, while borrowers are turning toward long-duration, negotiated capital with partners who understand their businesses. These dynamics are reshaping the financial landscape and creating durable opportunities for institutions with the right capabilities and time horizon.

The rise of private credit assets under management (AUM) is emblematic of benefits that private capital offers—a flexible channel for funding, attractive yields for investors, and lower systemic risk by reducing reliance on deposit-based, highly leveraged bank balance sheets.

The Current Macro Backdrop

The global economy has been remarkably resilient in the face of major U.S. policy shifts, and structural tailwinds are supporting activity.

Healthy private balance sheets are enabling firms and households to absorb shocks. Expansionary fiscal policy is boosting infrastructure and defense investment. Artificial intelligence (AI) is driving a sustained wave of investment, supporting higher equity prices and easier financial conditions. As its use expands, it should lift productivity and strengthen long-term growth. Overall, growth is expected to be around trend in the U.S. and globally in 2026.

However, there are material risks to the outlook. U.S. tariffs around 15% and geopolitical risks pose ongoing challenges to global supply chains. Tighter U.S. immigration policy has lowered labor force and overall trend growth, while raising risks of labor shortages and renewed wage pressures. Beyond cyclical dynamics, these and other politically-driven policies can adversely impact long-term growth potential. Debt sustainability concerns risk higher government bond yields and could force fiscal adjustments in the medium term.

AI payoffs also remain uncertain. Today’s rich valuations could reset sharply if earnings disappoint. Alternatively, if AI labor substitution delivers productivity at the expense of jobs, this could erode employment opportunities (particularly for younger workers) and weigh on demand.

Inflation has come down materially from 2022-23 peaks, allowing central banks to ease policy. However, it remains sticky and above target in a number of economies, and weaker global trade integration and tighter immigration policies keep supply shock risks elevated. ‘Neutral’ policy rates (i.e., the rate the Fed considers to be neither restrictive nor supportive) are also likely to remain higher than in the previous cycle, due to faster productivity growth, stronger structural demand for capital, and fading global savings surpluses. Taken together, even as inflation and interest rates should moderate from current levels, they are both likely to remain higher than the 2010s.

Primary Investment Businesses 

Charting Liberty's Investment Path

Through the Global Strategy & Capital Allocation (GSCA) team, LMI ensures that portfolio decisions align with Liberty’s long-term objectives, solvency needs, and capital strategy. As the steward of enterprise-wide portfolio construction, GSCA provides the strategic framework that guides all investment activity across LMI.

Together, our integrated investment platform, long-term mindset, and commitment to risk-aware investing enable LMI to act as a trusted fiduciary of Liberty’s capital.

Portfolio Strategy

Our portfolio strategy reflects Liberty’s evolution into an integrated insurance and capital solutions partner with global reach. Our purpose at LMI is clear: build enduring businesses alongside our partners, drive economic growth, and generate superior risk-adjusted returns—advancing Liberty’s enterprise strategy and securing the promises made to policyholders.

We take a disciplined, long-term approach to capital allocation—balancing return, risk, and liquidity—across both public and private markets. Our strategy is grounded in a deep understanding of Liberty’s insurance obligations and financial profile, ensuring that invested assets grow in step with our long-term commitments to policyholders and other stakeholders. 

Our strategy begins with a forward-looking perspective on Liberty’s financial needs. We carefully assess how our asset base, liabilities, and capital position are expected to evolve, so that we can:

• Invest confidently through market cycles.
• Manage risk responsibly.
• Preserve the flexibility needed to meet future insurance and business needs.

This disciplined approach ensures that every investment decision reinforces Liberty’s long-term financial health—maintaining the company’s ability to deliver on promises to policyholders while generating attractive returns.

Diversified, Resilient, and Efficient

We manage a diversified portfolio that spans public markets (such as corporate bonds, government securities, and equities) and private markets (including private credit, infrastructure, and private equity). Across all asset classes, our focus is on:

• Capital preservation to protect Liberty’s balance sheet.
• Steady and diversified income generation to support financial growth.
• Long-term compounding of value to create enduring growth.

As the investment landscape grows more complex, we continue to balance diversification, flexibility, and resilience to capture opportunities across cycles. In certain market environments, liquid public markets enable us to act with speed and capture near-term value. In others, patient capital deployed into long-dated private assets can deliver sustained growth. By combining flexibility with discipline, we generate outcomes that safeguard policyholder obligations, strengthen Liberty’s financial position, and drive long-term value creation.
 

Executed by a Global, Integrated Investment Platform

Our investment strategy is executed by four specialized businesses:

• Global Liquid Markets: Focused on public fixed income, equity, and trading strategies.

• Global Credit Markets: Provides an integrated corporate credit investment business spanning Direct Lending, Capital Solutions, and Public Leveraged Finance. 

  
• Global Alternative Markets: Covers private equity, real estate, energy and infrastructure, and alternative credit.
• Global Strategy & Capital Allocation: Sets and executes Liberty Mutual’s General Account investment strategy and capital allocation, in addition to managing specialized portfolios focused on Tax Equity and Tax Credits, Impact Investing, Corporate-Owned Life Insurance (COLI), and the Liberty Mutual Pension Plan.

Global Liquid Markets 

Global Liquid Markets (GLM) anchors LMI’s investment approach by delivering strong, risk-adjusted returns, balancing business needs with market opportunity, and actively managing risks related to income, liquidity, and policyholder obligations. The team pursues return wherever it lives, across fixed income and equities, in cash and synthetic markets, spanning developed and emerging economies, with the discipline of a long-term asset owner and the conviction of an active risk-taker.

Beyond everyday portfolio management, the team leverages our long-term orientation and willingness to provide liquidity to position boldly, absorb volatility, and capitalize on opportunities when other retrench. Through GLM Ventures, the platform extends its reach by cultivating strategic partnerships and backing high-conviction investments with patient capital and strategic sponsorship. GLM can act as an anchor for our private markets partners when they transition to public markets, leveraging an integrated investment platform and access to real-time market intelligence.
 
 

Global Credit Markets

Global Credit Markets (GCM)¹ partners with management teams and private equity sponsors to deliver holistic financing solutions across the capital structure in both public and private markets. Building upon 40 years of private markets experience², the expertise of our team, and our integrated platform, GCM is able to tailor our flexible capital to support each company’s evolving needs—whether for M&A, strategic growth, dividend recapitalizations, pre-IPO financing, or public market credit issuance. 

Private Credit

Our Direct Lending and Capital Solutions mandates invest across the capital structure to meet borrowers’ needs, with a focus on speed, alignment, and execution certainty. Together, they make up our private credit business.

The Direct Lending mandate partners with private equity sponsors and founder-led businesses across the lower, middle, and large markets. The team provides secured lending solutions to support each borrower’s unique needs including acquisitions, recapitalizations, and refinancings. We prioritize building relationships while combining deep investment and sector expertise to serve as a value-added partner—trusted by borrowers and aligned with co-lenders.

The Capital Solutions mandate partners with borrowers, sponsors and founders to provide bespoke financing solutions across a range of situations, from strategic growth to recaps and more complex needs. The team creates customized solutions across the risk spectrum that align with partners’ specific capital needs and business objectives from senior secured lending through to a variety of equity structures. Capital Solutions also often works in partnership with our Alternative Credit franchise to provide solutions that span between corporate and asset-based investing, working across our integrated platform.

Financing Durable Growth

In 2025, LMI supported the growth of a leading residential services provider building a scaled national platform in a fragmented market. The company’s high-margin, low-capex model and recurring, non-discretionary demand offer strong free-cash-flow generation and inherent downside protection. LMI served as Joint Lead Arranger, committing the majority of a $110 million credit facility and leveraging long-standing relationships with both the sponsor and administrative agent. The deal reflects LMI’s ability to partner with experienced sponsors and deploy capital into durable, growing sectors.
 

Bringing Holistic Financing Solutions to Specialized Markets

LMI launched a partnership in December 2025 with Willis Lease Finance Corporation (WLFC), a leading lessor of commercial aircraft engines and a global provider of aviation services. Led collaboratively by LMI’s Capital Solutions and Alternative Credit teams, the partnership was established to invest up to $600 million in loan and loan-like engine financings.

These loans will augment WLFC’s existing core leasing product offering and provide engine owners with a new option to finance their assets. The investment also supported the launch of WLFC’s new asset management business, Willis Aviation Capital.

The transaction highlights the strength of LMI’s integrated investment platform, bringing together expertise across asset classes to develop and deliver holistic financing solutions across the capital stack. By leveraging deep sector knowledge, flexible structuring capabilities, and long-standing relationships, LMI is able to support world-class partners as they build enduring businesses while accessing differentiated opportunities in specialized credit markets.

The Public Credit mandate manages the firm’s liquid leveraged corporate credit assets, which include public high-yield and leveraged loans. The team leverages LMI’s deep sector expertise and integrated platform to enhance deal certainty, fill allocation gaps, and support successful outcomes across public and private credit portfolios.

The Partnerships mandate allocates capital to credit managers, including anchoring new strategies and emerging teams as well as supporting established platforms across multiple fund vintages. The team partners with best-in-class external managers through thoughtfully structured vehicles and funds aligned with LMI’s return, liquidity, and governance objectives. As a dedicated partner, the team supports managers across every stage and backs managers that pursue specialized or non-traditional strategies where flexibility, creativity, and early conviction can produce strong returns.
 

Global Alternative Markets

Global Alternative Markets (GAM)¹ employs a partnership-led approach via traditional LP interests and co-investments, as well as direct investments. GAM’s integrated model allows us to provide solutions across the capital stack, from investment grade lending to all forms of equity. Leveraging our 
decades-long industry relationships and capital durability, GAM generates risk-adjusted returns to strengthen our balance sheet for the benefit of our policyholders.

The Private Equity mandate focuses on high-potential opportunities across venture, growth equity, and buyouts. We partner with exceptional investment managers and operators, often early in their development, building lasting relationships that compound over time. Our long-term orientation and structural flexibility allow us to act as business builders—backing emerging investment managers and supporting the development of new business platforms with durable growth potential.

We seek out investment talent with deep, differentiated expertise in specific industries or sectors, augmenting our experienced team with specialized knowledge that sharpens our edge. Combined with the ability to move quickly and capture unique opportunities, we deliver alpha across fund investments, 
co-investments, direct investments, and bespoke structures.

The Real Estate mandate targets core-plus, value-add, and opportunistic investments across major property sectors, primarily in the United States. The strategy includes both acquisitions and ground-up development in markets supported by durable supply-demand fundamentals. By partnering with experienced, best-in-class operators, the platform seeks to generate repeat investment opportunities, create long-term value, and deliver attractive risk-adjusted returns across market cycles.

Developing Premier Student Housing

In September 2025, LMI and Landmark Properties, a leading student-housing developer and operator, formed two joint ventures for the acquisition and development of two new student housing projects at Pennsylvania State University and the University of Connecticut. The joint ventures will deliver approximately 1,255 purpose-built, off-campus student housing beds and add to LMI’s student housing portfolio of approximately 17,000 beds at high-growth universities across the U.S. 

Student housing is a key focus area for LMI due to the lack of purpose-built inventory, resilient cash flows, and attractive development yields. As demographic trends and enrollment dynamics continue to drive demand for housing, our partnership with Landmark reflects LMI’s focus on high-quality real estate investments in attractive markets, supported by experienced operators and the strength of our network to source compelling opportunities.

The Energy & Infrastructure (E&I) mandate targets opportunities that support secular growth trends across attractive sectors within energy and infrastructure, including rising power demand, expanding data consumption, decarbonization, and aging infrastructure. We leverage our patient capital and flexible approach to capitalize on market dislocations and emerging trends through fund investments, co-investments and direct investments.

We provide our partners with access to our subject matter expertise, established track records, and ability to underwrite complexity. By doing so, we can achieve compelling risk-adjusted returns with a focus on opportunities that offer strong downside protection with significant upside.

 

Accelerating Next-Gen Geothermal Development

Our E&I mandate comes to life through investments like Fervo Energy, a next-generation geothermal energy company based in Houston, Texas. In 2025, LMI participated in its third funding round for Fervo, supporting the company’s 
Series E raise, after initially learning about the company from a trusted partner within our network.

For years, the high 
up-front cost of accessing geothermal energy—coupled with geographic limitations and technical uncertainty—has limited its adoption despite its carbon-free profile. Fervo is tackling these challenges differently. Leveraging innovations in horizontal drilling and completion techniques, Fervo has the potential to provide cost-competitive 
carbon-free power at scale. The company is currently developing what’s anticipated to be the largest enhanced geothermal systems development in history, a 500-MW plant in Milford, UT. Phase I, expected to provide 100-MW, is set to first provide power in 2026.

As demand for carbon-free energy grows, LMI’s investment in Fervo reflects our focus on scalable, cost-competitive clean energy solutions and the power of our network to source new opportunities.

The Alternative Credit mandate is focused on non-corporate credit investments, specializing in the residential, commercial, consumer, commercial real estate, structured credit/fund finance, and energy and infrastructure sectors. The team leverages the LMI network to source transactions directly from borrowers and also invests alongside our partners, providing certainty of execution and a diversified funding source.

The team targets opportunities in the credit market where we can be a differentiated solutions provider and focuses on those backed by assets that offer robust downside protection. We support our partners by providing bespoke asset financing solutions across the capital structure and both public and private markets, offering customized terms to meet the specific funding needs of our borrowers and platforms.

 

Deepening the Affirm Connection

We expanded our relationship with Affirm in early 2025. Affirm Holdings, Inc. is a payments network that empowers consumers and helps merchants drive growth. LMI’s investments with Affirm began in 2019 and grew from private financing to public securitizations and forward flow in 2023.

In 2025, we increased the program to purchase Affirm’s installment loans on a forward flow basis, in amounts up to $750 million outstanding. Over time, we expect to invest up to $5 billion in the program.

LMI’s ability to invest flexibly across the capital structure enables our solutions to scale alongside our partners so that we can show up where and when they need us most.

Expanding Partnerships with Skilled Operators

In August 2025, LMI expanded our long-standing strategic partnership with RXR, a leading real estate owner, operator, and developer, to pursue a platform targeting up to $1 billion in real estate credit investments across the U.S. LMI also served as the lead investor in RXR’s $250 million investment-grade corporate bond financing, demonstrating the breadth of capital solutions LMI can deliver to trusted partners.

The platform builds on a relationship that began in 2010 and focuses on providing flexible financing solutions across the capital stack. Led by our Real Estate and Alternative Credit teams, the transactions demonstrate the strength of our integrated investment platform, enabling seamless 
collaboration, differentiated deal flow, and the ability to scale capital in innovative ways.

In a market defined by capital dislocation and financing gaps, the expanded collaboration with RXR underscores LMI’s role as a long-term, capital solutions partner focused on supporting high-quality operators to build and strengthen enduring businesses.

Global Strategy & Capital Allocation

Global Strategy & Capital Allocation (GSCA) leads several cross-enterprise partnerships that can unlock significant economic value and fall outside of traditional investment mandates. The team also leads specialized mandates—including Tax Equity & Tax Credits and Impact Investing.

In addition, GSCA oversees Liberty Mutual’s Corporate Owned Life Insurance program and manages the company’s pension portfolio, ensuring a strategic and disciplined approach to long-term capital stewardship.

The Tax Equity & Tax Credits mandate is focused on investing in a wide array of state and federal tax credits that strengthen communities and accelerate a more sustainable future. These investments provide compelling risk-adjusted returns and drive capital towards important public sector priorities. We invest in the direct purchase of transferable tax credits and serve as a provider of tax equity. Our tax-motivated investments are often made in tandem with other forms of investments and are part of our mission to be a holistic provider of flexible capital.

The Impact Investing business is rooted in LMI’s belief that capital is a force for good. With a long-term lens and deep expertise across diverse asset classes, the team invests in opportunities that generate strong, risk-adjusted returns while advancing enduring social and economic impact. Guided by LMI’s cultural pillars and outcome-focused approach, we direct capital toward themes that foster resilience and shared prosperity—including expanding access to essential services, boosting social mobility, and revitalizing communities. By engaging early with world-class operators, we are able to lean into dynamic sectors, nurture promising opportunities, and deliver results that matter for people, businesses, and society.

Backing Bold Solutions

In May 2025, we partnered with Enable Ventures, the first impact venture fund dedicated to closing the disability wealth gap while delivering competitive, market-rate returns. Enable Ventures invests in companies that develop tools and technologies to upskill and reskill people with disabilities, enhance work-related and assistive technologies, and remove systemic barriers to participation in the workforce. The firm also supports innovations built by entrepreneurs who have disabilities and individuals who are co-designing with them, allowing them to leverage lived experience as a strategic advantage.

The positive impact of Enable’s investments is supported by research from the National Center on Leadership for the Employment and Economic Advancement of People with Disabilities, which found that people with disabilities who are employed experience better health outcomes. Furthermore, one in four Americans has a disability, a prevalence expected to rise with an aging population and underscoring the increased need for solutions that address this historically underserved and fast-growing market to provide a higher quality of life.

We believe that, as a flexible and patient partner, LMI can help leading operators and investors like Enable scale their impact across industries—delivering strong returns, improving quality of life, and fulfilling our cultural pillar of using Capital as a Force for Good.

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