Credit ratings agency S&P Global Ratings reported that EU insurance and reinsurance companies have been steadily increasing their allocations to private credit.
The research results were published in its Insurance introduction The company’s announcement on April 23, 2026 stated that the announcement did not constitute a rating action.
S&P Global Ratings said EU reinsurers and insurance companies have increased their private credit risk exposure from 3.9% in the fourth quarter of 2016 to 5.8% in the second quarter of 2025.
The company attributed the growth to broader efforts by insurers to diversify portfolios and improve returns. The report highlights that life insurance companies generally allocate more private credit than other areas, mainly due to their long-term liabilities related to products such as life insurance savings and retirement business.
S&P Global Ratings said certain areas of the private credit market, including distressed debt, the junior securitization segment and leveraged buyout debt funds, may present higher risks.
However, the company noted that EU reinsurers and insurance companies have relatively limited investment in these areas, which reduces their overall impact on portfolio risk profiles.
Standard & Poor’s reported that private credit accounted for 5.1% of EU reinsurance and insurance company investments in 2024, or about 515 billion euros, based on data from the European Insurance and Occupational Pensions Authority. The company added that life insurers accounted for 57.5% of this risk, general insurers 23.2%, non-life insurers 14.6% and reinsurers 4.7%, reflecting differences in business models and reinsurers. Responsibility structure.
S&P explained that larger global insurers and reinsurers began developing private credit capabilities more than a decade ago, while smaller regional players were later entrants to the market and often relied on outside asset managers for exposure.
The firm also noted that regulatory developments have important implications for investment strategies. It noted that a planned update to the Solvency II framework in January 2027 could affect capital requirements and could increase the attractiveness of securitized assets such as mortgage debt. S&P also cited Solvency II adjustments earlier in 2019 that reduced capital charges on certain unrated debt under certain conditions and supported growth in private credit allocations.
S&P describes private credit as generally unrated and less liquid than traditional fixed income assets, which often results in higher capital charges. At the same time, the company noted that some instruments in the market, such as promissory notes and highly rated senior mortgage debt, are relatively low-risk.
The firm further observed that exposure to illiquid assets is large in absolute terms but more modest relative to the overall portfolio. It cited data showing German reinsurance and insurance companies hold about 92 billion euros in unlisted corporate bonds, while French peers hold about 28 billion euros. S&P Global Ratings added that mortgages and loans account for about 50% of private credit risk in Germany and about 25% in France, and even higher if investments held through funds are included.
Standard & Poor’s noted that promissory note lending has led to increased German exposure to unlisted corporate bonds, typically involving domestic borrowers such as government agencies, municipalities and highly rated corporates, reflecting a degree of preference among EU reinsurers and insurance companies for their domestic markets.
Volker Kudszus, credit analyst at S&P Global Ratings, added: “EU reinsurance/insurance companies’ exposure to illiquid assets is considerable in absolute terms but limited in relative terms. We will continue to monitor their private credit exposure and the impact on their financial strength and resilience.”
Looking ahead, S&P Global Ratings said it will continue to assess the impact of increased private credit risks on the financial strength and resilience of EU reinsurers and insurers. The company added that while the upcoming Solvency II update is not expected to significantly change overall asset allocation, changes in capital requirements could still impact future investment decisions.
