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“It’s going to come down to performance,” Jon Gray, president and chief operating officer at the $1.3 trillion alternative investments giant Blackstone said at the conference. “There’s this assumption that somehow this new area that has grown very quickly is going to create some sort of very big problem, but I think the skeptics will be disappointed.”
Life insurers’ capital buffers could withstand severe private credit stress, S&P finds
By Rob Kozlowski
Pensions&Investments
April 28, 2026
North American life insurance companies can withstand severe stress in private credit markets without widespread ratings downgrades, according to an S&P Global Ratings report.
Amid growing scrutiny of the private credit asset class, particularly regarding insurers allocating more, the ratings agency created five private credit stress scenarios for 57 life insurers and how each company’s capitalization would hold up under those scenarios. The 57 insurers represent 95% of the North American life insurance companies for which S&P provides ratings.
The findings suggest that under the conditions of the most extreme scenario — a crisis with roughly double the default impact of the global financial crisis — only two insurers could face credit downgrades, and about half would see no meaningful capital impact at all. The remaining four scenarios would see manageable impact with no likely effect on ratings.
Notably, the report also reveals a considerable range of risk appetite, particularly that private equity-affiliated insurers have twice as much private credit exposure as publicly-traded insurers — signaling that ownership structure fundamentally shapes their asset allocations.
Among the universe of 57 insurers, privately rated/placed bonds made up about 10.5% of total bonds, but that number is skewed by the private equity-affiliated insurers. Those insurers have just under 20% of their bonds in privately rated/placed bonds, compared with about 8% of publicly-traded insurers. Mutual insurers adhere closest to the average, at about 10% of bonds in privately rated/placed bonds.
In providing stress tests for private credit under the most extreme scenario, S&P Global’s report comes in an environment of growing skepticism regarding private credit, particularly redemptions in BDCs.
For example, speakers at the recent Moody’s Credit Frontiers 2026 conference in New York on April 23 felt it necessary to address that skepticism.
“It’s going to come down to performance,” Jon Gray, president and chief operating officer at the $1.3 trillion alternative investments giant Blackstone said at the conference. “There’s this assumption that somehow this new area that has grown very quickly is going to create some sort of very big problem, but I think the skeptics will be disappointed.”
Blackstone’s Gray said the fastest growing part of his firm’s credit business is investment-grade credit with insurance customers as well as pension funds and sovereign wealth funds looking to this space.
S&P Global Ratings in its report says that the performance of private credit loans “thus far has been largely holding up.”
The report concludes that the stress tests show that life insurers’ emphasis on robust capital buffers, risk management practices and a diversified investment portfolio enables them to absorb stress.
The ratings agency does, however, note that life insurers will “in all likelihood” continue to hike their allocations to private credit and that the industry has a responsibility to manage that growth prudently.
“We will continue to monitor and report on this trend, factoring its risks into our ratings,” the report said.
Lydia Tomkiw contributed to this report.
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