Private Credit Considerations for Insurers

Antares believes that private credit – especially senior secured direct lending, should be an integral part of many insurers’ portfolios. Implementing its allocation would require thoughtfulness around investment vehicle, manager selection, and relevant capital and regulatory considerations.

Private credit, here defined as corporate direct lending, is an asset class that we have seen grow rapidly in the last few years for many types of institutional investors. For insurance companies, in particular, the asset allocation decision makers for the general accounts had already increasingly turned their attention to alternatives in the prolonged low-yield environment prior to 2022. In the last two years with rapidly rising rates, private credit has emerged as an attractive asset class that fits well into the overall investment portfolio. In fact, multiple insurance investor surveys conducted in 2023 have mentioned private credit as one of the top asset classes that insurers are looking to grow¹. Given life insurers’ sensitivity to the asset risk component of risk-based capital, exposures to private credit are frequently structured in a capital efficient manner. Later in this piece, we discuss some of the common structures for insurance companies to access the private credit markets.

¹ Surveys include Goldman Sachs Asset Management Insurance Survey 2023, BlackRock 2023 Global Insurance Report, Mercer 2023 Global Insurers Investment Survey, Clearwater Analytics 2023 Insurance Investment Outsourcing Report, Milliman’s 2023 Illiquid Asset Survey