German insurers are expected to increase their private credit allocations despite mounting concerns over liquidity and asset valuations, according to a Moody’s Ratings report covered by Reinsurance News.
Private credit accounted for approximately 9.3% of German insurers’ total invested assets at the end of 2024, compared with a European insurance sector average of 7.5%.
Germany represented roughly half of European insurers’ private credit exposure, with Germany, France and the Netherlands collectively accounting for around 72% of the total.
The proportion of illiquid assets in German insurers’ investment portfolios increased from 15.8% in 2019 to 19.4% in 2025. Among life insurers, the share rose from 19% to 25.1%.
Mortgages and loans accounted for approximately 71% of German insurers’ private credit investments, while unlisted corporate bonds represented a further 21%, totalling €92bn at the end of 2024.
Moody’s expects insurers to expand beyond traditional private placements into direct corporate lending, infrastructure debt and asset-based finance, supported by demand for long-term income-generating assets.
The agency also identified potential investment opportunities in German infrastructure, defence, energy transition and digitalisation projects.
However, Moody’s warned that limited secondary-market liquidity and valuation uncertainty could increase investment risks, particularly as insurers expand into more complex private credit strategies.
Despite these concerns, the agency reportedly does not expect further private credit investment to materially weaken insurers’ financial positions, citing strong capitalisation and established risk management practices. German life insurers reported an average Solvency II coverage ratio of 374% at the end of 2025.
Moody’s reportedly expects private credit exposure to grow potentially faster than insurers’ overall illiquid asset holdings, with portfolio reallocation likely to drive much of the increase.
