Insurers hold ~50% private credit AUM
- Bank for International Settlements and Moody’s research shows insurers have become a core funding base for private credit as life companies shift deeper into illiquid loans. - Reuters reported April 22 that listed business development companies traded at roughly 0.74 times forward net asset value, a 26% discount. - Regulators say opacity, offshore reinsurance and retail flows could amplify stress if losses hit insurers’ private assets. (bis.org)
Insurance companies have become one of private credit’s biggest funding sources, tying retirement products and annuities more closely to illiquid corporate loans. (bis.org) (moodys.com) The Bank for International Settlements said in September 2024 that life insurers have increased exposure to riskier and less liquid assets, while private equity firms have pushed investment into private markets through acquisitions, partnerships and affiliated reinsurers. (bis.org) Moody’s said on June 2, 2025 that U.S. life insurers hold about $6 trillion in assets, have moved nearly $800 billion in reserves to offshore affiliates, and have sharply expanded ties with alternative asset managers since 2018. (moodys.com) Private credit is lending done outside banks, usually to midsized companies, with loans that trade rarely and are often valued by models instead of daily market prices. The Bank for International Settlements said the market has grown to more than $2.2 trillion globally. (bis.org 1) (bis.org 2) That structure fits insurers because life policies and annuities bring in long-dated money, but it also links policyholder promises to assets that can be hard to sell quickly. The Bank for International Settlements said losses in private markets could spread through an increasingly interconnected insurance landscape. (bis.org) The market is already showing stress signals in public. Reuters reported on April 22 that listed business development companies, a public window into private credit, were trading at the deepest discounts to net asset value in more than 5-1/2 years. (usnews.com) According to LSEG data cited by Reuters, the median price-to-forward 12-month net asset value ratio for those firms was about 0.74 at the end of March, implying a 26% discount, the widest since October 2020. (marketscreener.com) The Bank for International Settlements added a second pressure point in July 2025: retail money is entering private credit through business development companies and newer exchange-traded funds, vehicles that can create sharper price signals in downturns. (bis.org) If those discounts persist, they can challenge the valuations used across private portfolios and make it harder for insurers, asset managers and reinsurers to argue that marks still reflect underlying credit quality. That is an inference from the BIS warning on transparency and the Reuters-reported gap between market prices and stated net asset values. (bis.org) (usnews.com) The regulatory concern is not that insurers are short-term traders. It is that a sector built to hold long-term liabilities has added opaque assets, offshore reinsurance chains and outside asset managers at the same time. (bis.org) (moodys.com) The result is that private credit’s backstop is no longer just pension money or institutional funds. It is increasingly the balance sheet of the life insurance industry, and regulators are watching whether that support holds in a real downturn. (axios.com) (imf.org)
