Life insurers owned by PE firms have significantly increased their exposure to private credit markets, deepening ties between the insurance sector and alternative lending ecosystems, according to a report by Bloomberg citing research from the Federal Reserve Bank of Chicago.
The study finds that insurers backed by firms such as Apollo Global Management and KKR have materially shifted portfolio allocations over the past several years toward higher-yielding private placements, particularly in asset-backed securities and financial sector borrowers.
Between 2017 and 2024, allocations by PE-owned insurers to financial and asset-backed private placements rose to 8% of total assets from 2%, compared with a more modest increase among traditional insurers to 4% from 3%, the researchers noted.
The report suggests this reallocation reflects a broader structural shift in insurer investment strategies, with life insurance balance sheets increasingly embedded within private credit markets that extend beyond traditional corporate and infrastructure lending.
According to the authors, the growing allocation to private placements exposes insurers to greater liquidity risk and increases interconnectedness across the financial system, as capital is increasingly deployed into financial intermediaries and structured credit vehicles.
While PE-owned insurers still represent a minority share of total industry assets – around 14% of general account holdings – they account for a disproportionate share of activity in certain segments, representing more than 40% of financial and asset-backed private placements as of 2024.
Despite the rapid growth, researchers noted that overall systemic risk remains limited for now, citing low default rates and the predominance of investment-grade ratings within private placement portfolios.
However, the study highlights that insurers have become increasingly important participants in private credit markets, contributing to rising integration between insurance balance sheets and alternative lending structures.
Private placements now account for roughly 14% of life insurers’ general account assets, up from 10% a decade earlier, underscoring a steady shift toward private credit instruments across the industry.
The findings also point to a widening ecosystem of borrowers, including private equity-backed lending platforms and specialised financial entities, reflecting how deeply private credit has expanded into non-traditional sectors such as structured finance and even sports-related revenue financing.
Apollo and KKR reportedly declined to comment on the findings.
