Signs of stress are growing in the private credit market on concerns over lending to AI-exposed software companies, illiquidity and default risk. Insurers have increased their exposure in recent years, raising questions over how seriously investors should take the current market ructions.
Major US asset managers have limited redemptions as retail investors sought to withdraw more than $20bn (£15bn) from private credit funds in the first quarter, per FT analysis, with the shares of big players such as Apollo (US:APO) and Blackstone (US:BX) down by a fifth this year.
European insurers generally have a small amount of pure private credit in their investment portfolios, but investors are becoming wary of spillover risks. Berenberg says money is rotating into insurers that have “relatively small investment portfolios and negligible private credit exposure”.