A wave of private credit money keeps reshaping the reinsurance market, and industry leaders say the shift nudges carriers toward riskier bets through intermediaries that don’t deal with the same regulatory load, according to The Financial Times.
The $2 tn property and casualty space has become a prime hunting ground for asset managers that already had a firm grip on life insurance capital flows.
Kevin O’Donnell, who runs RenaissanceRe, said private credit firms act far more aggressively these days, drifting from life into casualty.
They’re not bound by the same solvency frameworks as reinsurers, so they load up on leverage and chase returns that a regulated balance sheet can’t match. It creates a kind of investment arbitrage, he said, where the constraints fall on insurers and the freedom sits with asset managers. The mismatch keeps widening.
Life insurance usually fits better with the long-term, illiquid loan books of groups like Apollo, KKR, and Blackstone. Casualty typically runs shorter, often with murkier long-tail exposures.
Maybe that contrast is exactly what makes the recent expansion so striking. KKR grabbed a stake in Peak Re in October, giving it a path deeper into Bermuda’s casualty business.
Blackstone pledged up to $170 mn to Fidelis in a structure tilted toward longer-duration risks, casualty included. Moves that seemed unlikely a few years ago now look almost routine.
Not everyone feels comfortable with the speed. Scott Egan of SiriusPoint said casualty growth demands caution, especially after the massive US liability payouts that blindsided carriers.
He pointed out a blunt truth: nobody knows the real cost curve for years, sometimes decades. That lag creates a blind spot insurers can’t shrug off.
Some reinsurers said private capital investors already influence underwriting choices in ways that feel backwards. One called it a “tail wagging the dog” moment, where investment goals seep into risk selection.
Alternative capital players, private credit and hedge funds among them, held about $115 bn of property and casualty reinsurance exposure last year.
That mountain of money pushed reinsurance prices down at a time when climate, cyber, and geopolitical shocks keep stacking up. Odd timing, honestly.
Lower prices sparked a scramble for fresh premium. Carriers leaned harder on managing general agents, which write policies on behalf of insurers that absorb the actual risk. MGAs ballooned fast. Conning Asset Management estimated their written premium doubled in five years to around $114 bn in 2024.
Rapid growth brought warnings. Several senior figures said competition for business encourages MGAs to take risks at silly prices. And since they don’t carry balance sheets or face the solvency tests that carriers do, they can scale quickly without feeling the same burn when things go wrong.
They collect fees for originating policies, and their valuations run on earnings multiples, which private equity loves. That makes them takeover bait, and the frenzy keeps feeding itself.
Reinsurers said this pass-through structure strips out incentives for disciplined underwriting. Traditional carriers feel the pain of bad risk on their books. MGAs often don’t.
Maamoun Rajeh of Arch Capital called the valuations “astronomical” and said the moment underwriting discipline unhooks from growth and fee chasing, the market accelerates toward sloppier behaviour. We think he’s right.
S&P Global echoed the concerns in a September report, noting MGAs can introduce problems ranging from loose underwriting to outright fraud or misaligned incentives.
According to our data, that risk sits at the intersection of rapid private capital expansion and patchy oversight. Maybe the market can absorb it for now, but the pressure keeps building, and everyone knows it.
