It’s concerning that insurance companies now have significant exposure to private credit based on questionable ratings
Better systemic bank exposure, but still not great
— Illiquid Insights (@IlliquidInsight) November 19, 2025
U.S. Insurers Are Binging on Private Credit, Moody’s Says
A handful of insurers are buying much of the investments, which are hard to trade and have relatively low credit ratings
The private-credit boom is rapidly changing the investments made by U.S. life insurers, with some firms parking more than half the fixed-income assets they need to fund policies and annuities in hard-to-trade debt, according to new research by Moody’s Ratings.
Illiquid investments accounted for $685 billion—about 18%—of the $3.8 trillion in fixed-income investments insurers held at the end of 2024. The pace of purchases seems to be increasing, with less-liquid private debt comprising about 23% of the $522 billion of bonds insurance companies bought in the first half of 2025, the report said.
US Insurers and Private Credit: Not All Private Ratings Are the Same
The NAIC’s proposal to contest private ratings from CRAs if they are three notches higher than the SVO assessment, effective January 2026, aims to address concerns over ratings shopping and ensure more accurate capital charges for US insurers who hold USD350 billion in privately rated securities.
Experts note insurers can leverage up to 10x their investment in private credit funds, amplifying risk if defaults rise