From LP to Data Streamer: How Insurers Are Becoming Asset Managers in Private Credit
As investors, insurance companies have one overarching priority. They want to generate predictable, defensible yield while matching assets to liabilities. Their investments need to generate predictable income and at the same time, they have to mature when liabilities come due. Doing so requires minimizing both liquidity risk and capital strain.
More recent pressures intensify these perennial investment priorities:
- Tougher solvency regimes from RBC, Solvency II, and the U.K. Matching Adjustment intensify capital efficiency requirements.
- Regulation and accounting standards like IFRS 17 and updated U.S. GAAP heighten transparency call for richer valuation and consistent, audit-ready reporting.
- Stable, liability-matched yield is becoming more difficult as risk patterns shift. Life insurers face greater risks due to longer life spans and higher incidence of conditions like heart disease, cancer, and diabetes. Property and casualty (P&C) and reinsurance contend with climate- and catastrophe-driven shocks.
In this pressure cooker environment, private credit assets with amortizing structures, tiered durations, and reliable coupons are especially attractive. Private credit can enhance yield without disrupting solvency discipline. But we are also seeing a progressive shift. While the favored model for insurers used to be as limited partners (LPs) in funds and assets managed by others, they have been taking increasingly active roles in structuring vehicles and more direct forms of investment.
Life insurers take center stage
Over the past decade, insurers have played a massive role in private credit. Life insurers are one of the largest providers of private credit through private placements. This private placements lending increased from $386 billion in 2014 to $849 billion in 2024.i
This integration makes insurers a primary funding engine for the private credit market because of their stable, continuous stream of policyholder premiums, especially in life insurance, where insurers manage the largest balance sheets. Their investment function often resembles core asset managers (AM) in scale and discipline. Larger insurers tend to have dedicated in-house teams or affiliate AM arms.
In addition, asset-liability management (ALM) in life means managing long-dated, largely predictable liabilities such as annuities, whole-life policies, and guaranteed benefits. ALM for life favors fixed-income instruments with steady cash flows and defined maturities. The nature of life insurance also raises the stakes for finding yield within regulatory boundaries, since traditional public fixed income spreads are thin. Together, these conditions strengthen the emphasis on private credit and the inclination to take a more active role in engineering credit portfolios and operating balance sheets.
Before
In their former role as participants in commingled funds pooled alongside other investors such as pensions and endowments, life insurers tended to treat private credit as part of the broader category of alternatives rather than as fixed-income assets. This treatment often entailed smaller allocation caps, benchmarking against other private vehicles.
In addition, life insurers had limited influence on the assets in a fund. They could not, for example, customize components, request rated tranches, set specific duration targets, or design covenant packages tailored to insurance capital requirements.
Insurers also would typically have to forgo custom reporting options. Typically, LP-style reporting stops with receiving quarterly statements in arrears, aggregate rather than loan-level detail, and simple internal rate of return (IRR). Insurers need metrics that align with their needs, such as book yield or carrying value, using amortization schedules to match assets to liabilities and to gauge capital impact under solvency rules.
After
Several things have taken place to change that dynamic. Broadly speaking, the evolution of private credit into a large asset class with significant expectations for growth has stoked the race for assets. Over the past 15 years, private credit has delivered annualized returns of 10.1%, compared to 8.6% for high-yield and 1.8% for investment-grade bonds, according to AAM analysis.ii
It has also diversified, offering a range of durations from short-term (consumer, auto) to medium-term (corporate, direct lending) to long-term (infrastructure). Finally, insurers also began to recognize that private credit can function like fixed income when structured properly:
Unlimited partnership
As major consumers of private credit and other asset-based finance instruments, insurers have leverage over how private credit vehicles work. We have seen several moves along the path to becoming a strategic design partner, and potentially more:
- Tier 1: Book-yield reporting, statutory schedules, and look-through transparency
- Tier 2: Separately managed accounts tailored to insurer ALM ladders with full loan portfolio visibility and control
- Tier 3: Rated feeders or structured sleeves that carve out rated tranches for capital-efficient treatment
- Tier 4: Co-investment sidecars that offer insurers the maximum level of fund governance and deal-level transparency
In addition, we are beginning to see true convergence in both directions. For example, Manulife has acquired private credit managers, effectively becoming an originator, at least under its corporate umbrella. In the other direction, examples such as Apollo’s acquisition of Atheneiii and KKR’s acquisition of Global Atlanticiv have helped private equity firms gain permanent capital at a time when traditional fundraising has weakened.
The role of technology and data
To serve insurers’ bespoke needs, many managers have needed to update their infrastructure. It is a question of building information symmetry. Insurers want continuous visibility, multi-basis accounting, reconciliation between IRR and statutory yield.
Meeting these needs pushes the edges of what reporting means. Private credit managers need to be able to unify loan-level data into portfolio-level analytics that can reconcile with insurance accounting. That explains why we see this as a pivot from the LP model. Instead of collecting LPs and putting them on the shelves, managers become data streamers, able to deliver metrics on demand.
Even with direct ownership ties, most partnerships still operate on separate systems and data architecture. Integration remains an ambitious goal. The firms get married on paper but live in separate houses. Each has its own systems, data definitions, and reporting cadence.
This situation is as inefficient as it would be between people. We think firms that treat operational data as the connective tissue between balance-sheet management and asset origination are better suited to get their house in order.
A unified data infrastructure allows for smoother solvency reporting, real-time exposure tracking, and scalable cross-asset ALM management. In a sense, the complexity of insurer requirements raises the bar to create an information advantage that compounds across portfolios and the private credit segment overall.
Future potential
The continued growth of private credit, by definition, creates more opportunities for insurers to take more active roles in their investments. While life has dominated, we already see parallel structural innovation for P&C insurers, although to continue, it must solve a different and shorter-term ALM equation. If insurers can construct full liability ladders from short consumer pools to long infrastructure within private credit.
Market growth will also spawn more secondary-market development and securitization transactions. BlackRock forecasts that total private credit AUM could reach $4.5 trillion by the end of this decade.v The more investable instruments that private credit can create, the more insurers will see fixed-income-like liquidity and tradability.
Even those with smaller balance sheets will find opportunities to shift private credit from an opportunistic alternative allocation to a fundamental fixed income lever in their portfolios. They will be able to stream data from private credit managers, and, in some cases, directly from loan portfolios, to design structures, orchestrate exposures, and master their own yield.
Authored By
Cesar Estrada
Cesar oversees Arcesium's investment operations, accounting, and data management solutions for private markets fund managers and institutional investors.
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[i] Federal Reserve Bank of Chicago, June 2025. https://www.chicagofed.org/publications/working-papers/2025/2025-09
[ii] AAM, December 4, 2024. https://aamcompany.com/insight/the-rise-of-private-credit/
[iii] Apollo, January 3, 2022. https://www.apollo.com/insights-news/pressreleases/2022/01/apollo-completes-merger-with-athene-and-finalizes-key-governance-enhancements-120051006
[iv] Global Atlantic, November 29, 2023. https://www.globalatlantic.com/news/kkr-to-acquire-remaining-37-percent-of-global-atlantic-in-all-cash-transaction
[v] BlackRock, June 2025. https://www.blackrock.com/ca/institutional/en/insights/credit-outlook
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