US life and annuity insurers increased their private credit holdings by 6% in 2024, continuing a trend that has seen these assets double over the past decade, according to a new report from AM Best.
The report notes that as traditional banks have reduced their commercial lending, nonbank lenders such as private equity and asset management firms have filled the gap, resulting in increased issuance of private credit. Some of these firms have entered the life and annuity market through acquisitions or minority investments, using insurance companies as platforms for permanent capital or to manage investment portfolios.
“Some examples include outright acquisitions of insurance companies to use as platforms to provide permanent capital and acquire additional blocks of business, or through minority investment or a similar arrangement, to earn fee income from managing large portions of a company’s investment portfolio,” said Jason Hopper (pictured above), associate director at AM Best.
A significant portion of the increase involves securities subject to the Securities and Exchange Commission’s Rule 144a, which allows institutional investors to purchase securities without an initial public offering. In 2024, private placement bonds rose 6.3% to nearly $1.8 trillion, making up over 45% of the industry’s bond holdings. Non-144a private placements, which are less liquid, reached more than $950 billion, accounting for 24% of the sector’s bond portfolio and 17% of invested assets.
Private placement holdings now include direct corporate lending and an increasing share of structured non-mortgage-backed securities (non-MBS). The report notes a shift toward structured non-MBS, with private letter rating (PLR) bonds making up nearly half of private credit investments in 2024.
There are differences in credit quality, as 54.7% of bank loans without a PLR were rated below investment grade, while over 70% of bank loans with a PLR were investment grade, including 49% rated NAIC-1.
The growth in private credit holdings is occurring alongside record-setting sales in the US annuity market. In the second quarter of 2025, total annuity sales increased 8% year over year to $119.5 billion, according to LIMRA.
For the first half of 2025, annuity sales reached $226.1 billion, and LIMRA projects that annual sales will surpass $400 billion for the year.
Fixed indexed annuity (FIA) sales have also contributed to this momentum, totaling $32.8 billion in the second quarter of 2025, a 5% increase from the prior year. FIA sales for the first half of 2025 reached $60.6 billion.
Registered index-linked annuity (RILA) sales set new records as well, with second-quarter 2025 sales reaching $19.1 billion, up 15% year over year. RILA products are attracting attention for their combination of protected growth and attractive participation rates, and new entrants and products are expected to drive further growth in this segment.
Structured non-MBS securities are now the second largest issuer type, representing 28% of private credit holdings in 2024, up from 17% in 2014. Over the past decade, structured non-MBS securities have grown at a compounded annual rate of 13%, compared to 5% for issuer obligations.
“Insurers have been investing in private credit for decades, but the type of issuer has continued to shift,” said Kaitlin Piasecki, industry research analyst at AM Best. She noted that issuer obligations, which involve direct lending to companies, now make up less than 60% of private credit allocations, compared to nearly 80% ten years ago.
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