Best’s Special Report: Asset Manager Relationships Lead Insurers’ Shift to Private Credit
July 29 2024 - 9:25AM
Business Wire
A decade-long trend of insurers steadily increasing their
private credit holdings continued in 2023, comprising 44% of the
bonds held within the insurance industry, compared with
approximately 27% in 2013, according to a new AM Best
report.
The Best’s Special Report, “Asset Manager Relationships Lead
Insurers’ Shift to Private Credit,” notes that insurers’ private
credit holdings grew 5.7% in 2023 to nearly $1.7 trillion. The
annual growth was the lowest in at least a decade, after increasing
around 10% annually from 2019-2022.
The report also cites non-mortgage backed structured securities
(non-MBS) such as collateralized loan obligations as a growth
driver. This shift has also coincided with more insurers having
private equity/asset managers (PE/AM) that hold controlling
interests along with investment manager subsidiaries.
Lending gaps created by traditional banking institutions
stepping back have been increasingly filled by non-bank lenders
such as PE/AM firms. At the same time, PE/AM firms, some of which
may originate these assets, continue to enter the U.S. life/annuity
(L/A) market in a variety of ways. These approaches include
outright acquisitions of insurance companies to use as platforms to
provide permanent capital and acquire additional blocks of
business, or through minority investment or a similar arrangement,
to earn fee income from managing large portions of a company’s
investment portfolio.
According to the report, over 41% of U.S. L/A insurers
outsourced more than 10% of their invested assets in 2023, up
marginally from 2022—but up from just under one third of companies
in 2016.
To access the full copy of this special report, please visit
http://www3.ambest.com/bestweek/purchase.asp?record_code=344966.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Jason Hopper Associate Director, Industry Research
& Analytics +1 908 882 2807
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