Axios · Financial Times · Bloomberg · Federal Reserve (FED) · Axios
The bottom line: Fear over private credit is raising questions about exposure in the life insurance industry
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A big, overlooked risk in private credit is coming from the life insurance industry, investors and economists warn.
Key facts
- A big, overlooked risk in private credit is coming from the life insurance industry, investors and economists warn
- That distress is raising concerns about the private credit market overall, which is much bigger than BDCs alone
- Private equity firms in recent years have gotten into the insurance business, driving up the industry's exposure, as the Fed report notes
- Reality check: While Cassandras like Milgram issue warnings, those in the industry say that insurers invest in safe private assets, unlike the software loans most at risk in the current private
Summary
Life insurance, particularly the annuities that people buy to fund their retirements, could be the vehicle through which the pressures on private credit affect the lives of real people. Stress is building in private credit, or nonbank lending. An increasing share of investors in private credit funds are looking to get their money out. Redemptions at business development companies, which invest in small and medium-size private firms, are rising, notes a report Thursday from Bloomberg Intelligence.