Insurers aim to invest more in private credit

NEW YORK:

Insurers and large institutions are preparing to put more money into private credit markets, a survey showed, even as wealthy investors turn cautious about the illiquidity and regulators scrutinise the industry's growing links to insurance balance sheets.

While private credit markets have been quiet for the past few weeks following a wave of redemptions, news this week showed the sector may be shifting towards investors better able to accept long lock-ups and away from clients with lower tolerance for limited exits. Insurers are still ready to commit money. A Marsh survey found 57% plan to increase private credit exposure over the next 12 to 24 months, including 81% of firms managing more than $25 billion and 73% of life insurers.

Alternative asset manager Blackstone said withdrawal requests at its flagship private credit fund fell materially early in the third quarter, after investors sought to redeem 10% of shares in the second quarter. The fund repurchased 5%, its customary quarterly limit. The pressure on private credit because of perceived risks over AI exposure has not stopped money managers from raising capital from diverse sources. Blackstone attracted nearly $70 billion across its businesses during the quarter, while institutional clients continued to allocate to private credit even as fundraising from wealthy investors remained muted.