80% of insurers plan to increase private credit holdings

Written by Adam Cadle

04/06/2024

Eighty per cent of global insurers with significant life insurance business plan to increase their private credit holdings over the long term, Moody’s has revealed.

In its latest survey with 30 global insurance companies, Moody’s found that private credit accounts for 36% of insurers’ total investments in the US, compared with 24% in the UK and 13% in Europe.

Growth appetite is highest in asset-based finance and private placements, with 44% of respondents expecting to increase long term allocations, followed by mid-market lending (39%), infrastructure lending (33%) and fund finance (22%).

Globally, insurers’ private credit assets are concentrated towards real estate lending, infrastructure lending and fund finance such as subscription credit facilities, net asset value (NAV) loans and rated feeder funds. Insurers’ private credit assets are mainly investment grade, Moody’s said.

“Higher private credit exposure does not necessarily signal increased appetite for investment risk, Will-Keen Tomlinson, vice president with Moody’s private credit team, said.

“Rather, many insurers have reallocated part of their portfolio toward less liquid assets of similar credit risk because they feel these investments now offer sufficient additional compensation for their lower liquidity.”

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