Private credit is increasingly becoming a core asset class for insurers due to its ability to match the investor’s long-dated liabilities, according to a report from financial technology provider Clearwater Analytics.
Private credit has risen to a median allocation of 9% across all insurer types, up from 4% in 2018, and these investors own approximately a 30% to 50% share of all private credit assets, according to Clearwater.
“Insurers, admittedly, comprise a disproportional share of the private credit universe,” the report stated. “The fit is in many ways structural: insurers carry long-dated, predictable liabilities, particularly on the life and annuity side, and private credit’s longer lockups match those liabilities well. The illiquidity that gives other investors pause is, for insurers, closer to a feature than a bug. They are not forced sellers and are compensated for their patience via an illiquidity premium.”
Despite the good fit, exposure to private credit is not uniform among all insurers. Clearwater noted that some insurance portfolios in its system allocate more than 40% to the asset class, more than four times the median allocation. The variance in exposure is a result of the needs of different types of insurers.
Life insurers—with long-dated, predictable liabilities and with annuities and policies than can sit on their books for decades—are the leading adopters of private credit. The median life insurance firm allocates about 20% to private credit, while property and casualty insurers and health insurers both allocate a median of about 5%.
“Private credit’s overall contribution to portfolios also rose meaningfully from 2024 to 2025, reflecting strong price returns and the gradual turnover of insurer books as rates settled higher,” the report stated. “That turnover is the central engine of recent performance. Insurers tend to hold to maturity, and as older credit rolled off balance sheets (and new credit was added at prevailing rates), the book yield on portfolios drifted upward.”
On average, insurer book yields on private placement bonds have climbed to more than 5%, according to the report, from 4% in early 2022, “lagging market rates as older, lower-rated paper has rolled off and been replaced by new bonds issued and traded in the new rate environment,” the report said.