Even as individual investors race to redeem their shares in semi-liquid private credit funds, such as those from Blue Owl, BlackRock, and Ares Management, direct lending remains a focus for institutions, particularly insurers.
At a recent private Institutional Investor conference, 20 percent of respondents to a live survey indicated they plan to add private credit to their portfolios this year, while 19 percent are looking to invest in real estate and real assets, including infrastructure.
As II previously reported, most insurance allocators said they will increase their allocation to private credit over the next 12 months, while 63 percent plan to up their investment to asset-backed finance. Twenty-six percent will invest more in private equity. The poll was conducted at II’s corporate funds and insurance portfolios roundtable in Washington D.C. on March 10, after the U.S. and Israel invaded Iran and Blue Owl made its announcement.
Industry observers that II reached out to in late March felt these survey results tracked with what they’ve seen. “Recent volatility and widening spreads in the private credit markets will attract more insurance capital not less,” said Mike Siegel, global head of insurance asset management and liquidity at Goldman Sachs Asset Management.
Erik Miller, a senior director at the insurance ratings agency AM Best, told II that the “strong growth in the annuity market, which is largely a spread-based business as opposed to underwriting mortality and morbidity returns, has driven the growth into private credit overall including direct lending and real assets.”
Miller added: “Retail investors may not share the same liquidity profile and may have underestimated the liquidity these types of funds provide.”
While insurers have invested in private credit for decades, their appetite for alternatives has grown in recent years — and OCIOs have noticed. Outsourced insurance assets reached $4.5 trillion in 2024, up 25 percent from the year prior.
