Insurance Quick Takes: US life insurers’ utilization of private placements

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In this month’s Insurance Quick Take, Tim Antonelli discusses two recent papers from the Chicago Federal Reserve on the use of private placement investments. While the papers are focused on US life insurers, Tim shares observations for insurers globally.

Key points: 

• Private placements may help insurers with goals related to asset/liability management, diversification, credit protection, and risk-adjusted returns.
• As insurers consider increasing their exposure to private placements, they also need to be aware of potential complexities and risks, including issues around relative liquidity and the recent growth in the floating-rate segment of the market.
• As interest rates begin to normalize, insurers may want to think about the private placement universe as an extension of their core bond and reserve-backing investments.  
   

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