Emerging risks

US insurers exposed to private credit by more than 35%, European by 10%

The big American banks also granted many loans to private vehicles: Wells Fargo 59.7 billion, BofA 33.2, Citi 25.8, JPMorgan 22.2, Goldman Sachs for 21.7

by Marzia Redaelli

13 March 2026

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

The market for private credit funds, which specialise in unlisted debt instruments mostly used to finance small and medium-sized enterprises, continues to report difficulties. From the first case of the freezing of Blue Owl Capital's fund, in fact, others are following. Alarms are also coming from professional investors, banks and insurance companies in primis, who have found good return opportunities in private credit.

What happened

On 20 February, the Blue Owl Capital fund banned subscribers from requesting redemptions from one of its funds. Blue Owl, like many private credit operators, is particularly exposed to lending to companies in the technology and artificial intelligence sector. The strategy, however, boomeranged when the financial market began to fear the ability of many companies to survive the artificial intelligence revolution. A sort of cannibalism of Ai caused tech giants such as Adobe and Oracle to collapse on the stock market.

Concerns about a very rapid obsolescence of technology businesses triggered a wave of selling on all markets, listed and unlisted. After Blue Owl Capital, other flaws have emerged in US private credit funds with billion-dollar assets, which have been targeted by abnormal redemption requests and have had to heavily write down software-related assets. These include Blackstone private credit (managing USD 82.5 billion), a Cliffwater fund (USD 33 billion), BlackRock corporate lending fund (USD 26 billion), Apollo and Kkr.

Banks' exposure

'Jp Morgan,' says Christian Zorico, head of fixed income at Frame Asset Management, 'is reducing its exposure to private credit and the value of loans held as collateral. This is a precautionary move motivated by the different market valuation. Most of these loans were granted to software companies. According to Moody's, by mid-2025, the banking system on Wall Street had provided some USD 300 billion in loans to private credit funds, with Jp Morgan's direct exposure amounting to USD 22.2 billion. The situation, of course, is not homogeneous. There are healthier private credit funds, exposed to businesses with estimable cash flows. However, the wave of redemptions may cause great instability or become a systemic danger, if there is a disruptive contagion effect'.

Private credit funds, in fact, are inflexible by definition, designed to meet limited redemption needs at a time. Conversely, a rush to redemption, like a bank run, can trigger ischaemia of entire market segments.

Among the other US banks, Wells Fargo was exposed to private credit for 59.7 billion, BoFa for 33.2, Pnc for 29.5, Citi for 25.8, Goldman Sachs for 21.7 billion.

Pressure on US insurance

Insurance companies are among the institutional investors most exposed to the private market because they have long-term objectives and, therefore, more time to maintain exposure to less liquid assets in exchange for higher returns than the regulated market. Also according to Moody's, insurance companies' exposure to private credit instruments averages over 35% in the US, 20% in the UK and 10% in the rest of Europe. In fact, since the warnings about private credit began, the spreads on the debt of specialised life insurance companies have widened.

In the October 2025 report on global financial stability of the International Monetary Fund, it is stated that credit risks in insurance portfolios may be higher than in official classifications. The IMF explains that insurance companies buy even very complex, leveraged private credit instruments. These are credits rated investment grade, the highest rating in terms of reliability. Therefore, insurance companies can hold them in their portfolio with less collateral for risk than would be necessary, but during a crisis they could lose more than expected. This would erode the insurance companies' capital and give rise to liquidity problems, as happened with Blue Owl and the other funds mentioned.

The International Monetary Fund also reports that an increasing share of credit risk assessments of financial assets is made by small rating agencies specialising in the private credit ecosystem. Already at the end of last year, Bloomberg reported that in 2025 alone, Egan Jones assigned ratings to over 3,000 private market investments.

Collateral effects on listed debt

The liquidity crisis, when it arrives, also cascades into good credit. "When there was the announcement of the war in Iran," explains Zorico, "for days there were problems with listed bonds that were considered safer, which were sold in order to get liquidity back quickly. Conversely, it seemed that private credit was more stable, because of the predetermined exit windows for funds. Barriers, however, can hold if the tensions are short-lived. If redemption requests were to persist, private credit funds would be left with the less liquid securities that are harder to sell and underwriters could be stuck. One must also consider that those who ask for redemption do so not only out of fear, but also because when bond yields rise, as they are now, it is not worth investing in risky securities with a premium that does not repay for the risk'.

Marzia Redaelliredattore
Luogo: Milano
Lingue parlate: italiano, inglese, francese
Argomenti: Financial markets, asset management, macroeconomics
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