European insurers and reinsurers have steadily increased their allocation to private credit, reaching 5.8% of portfolios in Q2 2025, up from 3.9% in 2016, according to S&P Global Ratings. The shift reflects a broader move to diversify assets and improve returns in a low-yield environment.
Private credit accounted for about 5.1%, or roughly €515 bn, of total investments in 2024. Life insurers hold the largest share at 57.5%, followed by composite insurers at 23.2%, non-life insurers at 14.6%, and reinsurers at 4.7%.
The distribution aligns with liability profiles, as life insurers manage long-duration obligations tied to savings and retirement products.
Growth in private credit exposure links to yield demand and asset-liability matching. According to Beinsure analysts, insurers continue seeking higher-return assets that align with long-term liabilities while maintaining capital efficiency under regulatory frameworks.
Risk remains uneven across segments. S&P highlighted higher-risk areas such as distressed debt, junior securitisation tranches, and leveraged buyout debt funds.
EU insurers maintain limited exposure to these segments, reducing the overall impact on portfolio risk.
Large global insurers began building private credit capabilities more than a decade ago. Smaller regional players entered later and often rely on external asset managers to access the market. This difference reflects variations in scale, expertise, and internal investment infrastructure.
Regulation plays a role in shaping allocations. Planned updates to Solvency II in 2027 could adjust capital requirements and increase the appeal of securitised assets, including collateralised loan obligations.
Earlier changes in 2019 reduced capital charges for certain unrated debt, supporting growth in private credit investments.
Private credit assets remain less liquid than traditional fixed income and are often unrated. These features typically lead to higher capital charges, though some instruments, such as promissory notes and senior CLO tranches, carry lower risk profiles.
Exposure levels vary by country.
- German insurers hold around €92 bn in non-listed corporate bonds, while French insurers hold about €28 bn.
- Mortgages and loans represent about 50% of private credit exposure in Germany and around 25% in France, with higher figures when including fund-based investments.
Promissory note lending contributes to Germany’s larger allocation, often involving domestic borrowers such as municipalities, government entities, and highly rated corporates.
This pattern reflects a preference for local market exposure within EU portfolios.
Volker Kudszus said private credit exposure remains significant in absolute terms but moderate relative to overall portfolios. He added that S&P will continue monitoring its impact on insurer financial strength and resilience.
