Deerpath Capital Insurance Series Vol. 1 – What Insurers Own When They Own Private Credit

Insurers and private credit are a natural fit, and the allocation data shows it: U.S. life insurers hold as much as a third of their $6 trillion in assets in the asset class. But “private credit” covers very different investments, from investment grade private placements to lower middle market direct lending, and insurance portfolios tend to concentrate at one end of that spectrum. In the first installment of our Insurance Series, Nelson Pereira examines what insurance portfolios actually hold, what drives the return in each form of private credit, and where the asset class’s most differentiated returns are found.

Key takeaways:

1. Insurance allocations to private credit concentrate in the most capital-efficient forms, which behave most like traditional fixed income.
2. Lower middle market direct lending, at the other end of the spectrum, is the purest expression of the asset class.
3. Insurers have solved for the capital of private credit. The opportunity ahead is the craft.

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