Key Takeaways
- • U.S. insurers held an estimated $1.21 trillion in investments falling under the NAIC's broad private credit definition at year-end 2025, about 13% of their cash and invested assets, according to a report released Nov. 5 by the NAIC Capital Markets Bureau.
- • A narrower $544 billion category, including privately rated bonds, business development companies and private credit funds, is the NAIC's primary focus due to structural complexity and alternative-asset exposure; it represents about 6% of insurers' cash and invested assets and 9% of total bond holdings.
- • Privately rated bonds account for roughly $512 billion of the narrower category, while BDCs and private credit funds total about $32 billion.
- • Private credit non-accrual rates were below their 10-year averages as of Q3 2025, but the NAIC cautions the market has not been tested by a prolonged, fully stressed credit cycle.
- • Private credit oversight will be a focus at the NAIC Fall National Meeting in Dallas, with the Credit Rating Provider Working Group meeting Nov. 15 and the Invested Assets Task Force meeting Nov. 16.
Summary
U.S. insurers held an estimated $1.21 trillion in investments that fall under the National Association of Insurance Commissioners' (NAIC) broad definition of private credit at year-end 2025, representing about 13% of their cash and invested assets, according to a new report released Nov. 5 by the NAIC Capital Markets Bureau. The report precedes the association's Fall National Meeting in Dallas, with sessions scheduled Friday through Tuesday, where private credit exposure is expected to be a central topic as regulators work to strengthen oversight of life insurers.
The $1.21 trillion estimate spans five categories: private placement bonds, privately rated bonds, bank loans, middle-market collateralized loan obligations, and business development companies (BDCs) and private credit funds. The categories can overlap; a private placement bond may also carry a private letter rating, and the NAIC adjusted for identifiable overlap in its total. The NAIC has identified a narrower $544 billion subset as warranting additional scrutiny because of structural complexity or exposure to alternative assets. Privately rated bonds make up approximately $512 billion of that subset, while BDCs and private credit funds account for about $32 billion.
The report notes that these investments can be difficult to evaluate due to limited transparency and complex structures, which can make it harder to assess borrower credit quality, valuations, liquidity and overall risk. It also examines payment-in-kind (PIK) provisions, which let borrowers add interest to their loan balance rather than paying in cash. While PIK arrangements can provide liquidity, they increase debt and can delay recognition of financial deterioration. Private credit non-accrual rates were below their 10-year averages as of the third quarter of 2025, according to data cited in the report. The NAIC cautioned, however, that the market has not been tested by a prolonged, fully stressed credit cycle, and that the asset class's rapid growth has occurred amid abundant capital, strong economic conditions and relatively low default rates. How these investments will perform in a more severe downturn remains uncertain, the report said.
The report comes as the NAIC reorganizes its investment oversight. Beginning in 2026, the Valuation of Securities Task Force was replaced by the Invested Assets Task Force and three working groups covering investment analysis, investment designation analysis and credit rating providers. The Credit Rating Provider Working Group will meet Sunday, Nov. 15, to discuss comments and consider adoption of a revised Credit Rating Provider Due Diligence Framework. The Invested Assets Task Force meets Monday, Nov. 16, with reports from the working groups and a KBRA presentation on emerging investment structures, including fund finance and complex structured investments. The NAIC also expects enhanced disclosures adopted in 2026 to provide more detail on private placement securities in year-end filings, which should improve regulators' ability to identify and measure private credit exposure. Other weekend session topics include artificial intelligence, illustrations, long-term care options and the cost of health insurance.
The $1.21 trillion estimate spans five categories: private placement bonds, privately rated bonds, bank loans, middle-market collateralized loan obligations, and business development companies (BDCs) and private credit funds. The categories can overlap; a private placement bond may also carry a private letter rating, and the NAIC adjusted for identifiable overlap in its total. The NAIC has identified a narrower $544 billion subset as warranting additional scrutiny because of structural complexity or exposure to alternative assets. Privately rated bonds make up approximately $512 billion of that subset, while BDCs and private credit funds account for about $32 billion.
The report notes that these investments can be difficult to evaluate due to limited transparency and complex structures, which can make it harder to assess borrower credit quality, valuations, liquidity and overall risk. It also examines payment-in-kind (PIK) provisions, which let borrowers add interest to their loan balance rather than paying in cash. While PIK arrangements can provide liquidity, they increase debt and can delay recognition of financial deterioration. Private credit non-accrual rates were below their 10-year averages as of the third quarter of 2025, according to data cited in the report. The NAIC cautioned, however, that the market has not been tested by a prolonged, fully stressed credit cycle, and that the asset class's rapid growth has occurred amid abundant capital, strong economic conditions and relatively low default rates. How these investments will perform in a more severe downturn remains uncertain, the report said.
The report comes as the NAIC reorganizes its investment oversight. Beginning in 2026, the Valuation of Securities Task Force was replaced by the Invested Assets Task Force and three working groups covering investment analysis, investment designation analysis and credit rating providers. The Credit Rating Provider Working Group will meet Sunday, Nov. 15, to discuss comments and consider adoption of a revised Credit Rating Provider Due Diligence Framework. The Invested Assets Task Force meets Monday, Nov. 16, with reports from the working groups and a KBRA presentation on emerging investment structures, including fund finance and complex structured investments. The NAIC also expects enhanced disclosures adopted in 2026 to provide more detail on private placement securities in year-end filings, which should improve regulators' ability to identify and measure private credit exposure. Other weekend session topics include artificial intelligence, illustrations, long-term care options and the cost of health insurance.
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