Moody’s reports that US life insurers are broadening their investment portfolios with increasing allocations to collateralised loan obligations and private credit, as growth moderates and regulatory frameworks develop, highlighting strategic resilience in a complex market environment.
Moody’s Ratings has reported that US life insurers are continuing to increase their investments in collateralised loan obligations (CLOs), although the pace of growth has moderated compared with previous years. This slowing is attributed to insurers diversifying their allocations across a broader range of private assets, including private credit, private placements, infrastructure lending, and other structured instruments.
According to Moody’s, total CLO holdings in the sector reached around $190 billion by the end of 2024, representing about 4% of the overall invested assets in the life insurance industry. While this proportion appears modest industry-wide, some insurers show substantially higher exposures, with concentrations exceeding 18%. The credit quality of these holdings has shown slight improvement, as insurers have trimmed riskier positions marginally. The bulk of CLO assets remain rated within the highest tiers defined by the National Association of Insurance Commissioners (NAIC) Securities Valuation Office (SVO), with over 39% classified as 1A, approximately 25% at Aa levels, and about one-third falling into single-A and Baa categories. Less than 3% of the CLO exposures are below investment grade, and this figure has decreased since 2022.
The report highlights that the growth of CLO holdings now more closely reflects the overall expansion of invested assets in the sector, in contrast to the rapid accumulation witnessed in earlier years. This shift occurs amid an environment of unusually high CLO issuance, including significant new transactions, refinancings, and resets throughout 2024 and continuing into 2025. Moody’s expects that future insurer allocations will align with broader market activity rather than replicate past acceleration.
Insurers have been maintaining a well-distributed portfolio across CLO vintages, with about 55% of positions originating from 2021 to 2024 and roughly 77% still within their reinvestment windows. Moody’s views this distribution favourably given that performance patterns tend to cluster by year of issue. Notably, insurers have also been expanding exposure to middle-market CLOs, which had grown to approximately $25 billion by the end of 2024 and comprise around 20% of the latest vintages. These middle-market holdings typically receive stronger SVO ratings compared to broadly syndicated loan CLOs.
In terms of structural protections, despite loan spread tightening and some rises in weighted-average rating factors, particularly in amortising CLO deals, senior over-collateralisation buffers remain robust. This resilience is aided by rapid principal repayments featured in amortising transactions and the strong protective elements inherent in CLO structures. Moody’s referenced the recent First Brands default to illustrate how individual borrower exposure limits, sector diversification, collateral quality requirements, and active management are critical safeguards that sustain stability. The flexibility within CLO structures to divert surplus interest to senior noteholders during periods of heightened defaults provides vital protection for senior tranches.
Insurers’ CLO holdings are broadly spread across collateral managers, with no single manager controlling more than roughly 4% of total insurer CLO assets. Major collateral managers in the space include Carlyle, Blackstone, and Golub Capital. While this diversification is positive, Moody’s pointed out that some insurers have significant positions with particular managers, potentially increasing overlap in underlying loan portfolios.
The regulatory environment remains in flux as the NAIC continues developing new risk-based capital requirements for CLOs, including a scenario-based modelling framework supported by the American Academy of Actuaries. Moody’s indicates that the final capital regime will depend on coordination among these efforts and that parameters have yet to be finalised. Preliminary analyses suggest that for US life insurers with CLO holdings exceeding $1 billion, risk-based capital charges could see modest declines under the proposed NAIC framework, encouraging further preference for senior positions and investments in CLOs later in their life cycle or amortisation phases.
Beyond CLOs, life insurers have been shifting substantial portions of their reserves offshore, primarily to Bermuda and the Cayman Islands, as part of a broader move into private credit and private equity-linked investments. Moody’s reports that between 2019 and 2024, nearly $800 billion in reserves were transferred offshore to enhance returns and maintain competitiveness, particularly through private credit fund finance. This strategic reallocation supports growth, competitive pricing, and shareholder-focused activities such as stock buybacks. However, Moody’s cautions that the illiquidity and opaque nature of private credit pose valuation and liquidation risks during economic downturns.
This pivot towards private credit is part of a wider trend across the insurance industry globally, with nearly 80% of surveyed insurers indicating plans to increase holdings in private credit despite concerns about the asset class’s higher risk profile and limited transparency. US life insurers also show increased allocations to less-liquid, privately rated fixed income assets, representing $685 billion or 18% of the fixed-income portfolio as of 2024. These assets typically have lower liquidity and weaker credit profiles, with about 41% rated NAIC 2 or Baa, and 10% falling below investment grade, proportions that notably exceed broader portfolio averages and elevate the risk of credit losses in stressed markets.
The life insurance sector’s outlook remains stable, buoyed by steady US economic growth projections of around 2% in 2025 and sustained high interest rates. Moody’s expects long-term Treasury yields to stay above 4% next year, supporting investment income and product sales, particularly in annuities. This environment partly mitigates credit and asset risks inherent in insurers’ growing portfolio exposures, including those in CLOs and private assets.
In parallel, US life insurers have been increasing holdings in uninsured residential mortgages, with top insurers such as Athene, Global Atlantic, and Corebridge Financial expanding significantly in 2024. This trend reflects ongoing efforts to diversify assets and enhance returns, though the mortgage exposure adds another layer of balance sheet risk.
Overall, Moody’s concludes that the combination of strong CLO structural protections, diversified insurer portfolios, preference for senior tranche investments, and broader economic tailwinds contribute to the resilience and steady growth of US life insurers’ CLO and private asset exposures, despite the challenges posed by evolving credit conditions and regulatory uncertainty.
- https://www.reinsurancene.ws/moodys-notes-steadier-growth-in-us-life-insurers-clo-holdings/ – Please view link – unable to able to access data
- https://www.reuters.com/world/americas/us-life-insurers-shifted-800-billion-offshore-from-2019-to-2024-moodys-says-2025-06-02/ – Between 2019 and 2024, U.S. life insurers moved nearly $800 billion in reserves to offshore affiliates, primarily in Bermuda and the Cayman Islands, amid a shift toward private credit investments. This transfer aimed to enhance returns and remain competitive with private equity-backed counterparts, especially during a prolonged low-interest rate environment from 2015 to early 2020. The industry saw approximately $75 billion in mergers and acquisitions between insurers and private equity firms during this period, including notable deals such as Allstate’s $2.8 billion sale of its life insurance assets to Blackstone and Brookfield Reinsurance’s $5.1 billion acquisition of American National. The funds were reallocated offshore to support business growth, offer more competitive pricing, and engage in shareholder-focused activities like stock buybacks. By the end of 2024, U.S. life insurers held around $6 trillion in total assets, with about one-third allocated to private credit, particularly in fund finance. Moody’s highlighted risks associated with this trend, citing lack of transparency and the illiquidity of private credit assets, which could pose valuation and liquidation challenges in economic downturns.
- https://www.reuters.com/business/finance/insurers-build-private-credit-exposure-coming-years-moodys-finds-2024-06-06/ – Global insurers plan to invest further in the growing but opaque private credit market, according to a new report by Moody’s Ratings. In a survey of the world’s largest insurers, nearly 80% of respondents planned to increase their holdings in at least one class of private credit. Deemed riskier and less transparent than the public market, private credit deals involving non-bank lenders and … . Insurers have already increased their private … driven by their attractive returns … . Despite their lack of transparency, survey … . However, the report highlighted the concerns … that the long-term risk of … . Analysts and market participants have forecast rising … , and commercial real estate loans. As they ramp up their private credit … “highly credit negative.”
- https://www.insurancebusinessmag.com/us/news/breaking-news/private-assets-boost-life-insurers-returns-but-heighten-risks-556746.aspx – US life insurers are increasingly turning to less-liquid and privately rated fixed-income assets to enhance investment returns, a trend with direct implications for insurers’ balance sheets and policyholder risk. As of year-end 2024, private letter-rated (PLR), Z-rated, and Level 3 holdings totaled $685 billion, or 18% of the industry’s $3.8 trillion fixed-income portfolio, concentrated among the top 10 insurers, according to a report from Moody’s. While these investments can provide higher yields, their lower liquidity and weaker credit profiles create potential challenges for insurers in meeting policyholder obligations. About 41% of these assets were rated NAIC 2 or Baa, with 10% below investment grade—double the share in broader portfolios—raising the risk of credit losses or rating downgrades during market stress.
- https://octus.com/resources/articles/us-life-insurers-face-modest-benefits-from-naics-risk-based-capital-for-clos-moodys/ – Most U.S. life insurers with CLO holdings of at least $1 billion would see their risk-based capital charges fall under the preliminary loss scenario probability distribution published in December by the National Association of Insurance Commissioners (NAIC), according to Moody’s Investors Service, but the impact would be modest. Across the five insurers potentially most affected by the move to risk-based capital, the total impact on required capital was $405 million. Only two firms, however (Wilton Re US and Fidelity & Guaranty Life), would experience declines of over 5%. The NAIC is seeking to eliminate what it considers capital arbitrage related to CLOs and other structured securities, whereby in the existing framework the capital charges for all the tranches in a securitization can be less than for the underlying portfolio. The regulator has said it plans to implement the final rules by the end of 2025. In December 2024, the NAIC published preliminary distributions for 10 default and recovery rate scenarios, substantially increasing the weight of the more adverse scenarios from the previously proposed distribution. The four most stressed scenarios now total 11%, against under 2% before. Moody’s applied these distributions to the insurers’ year-end 2023 CLO holdings, calculating a capital loss for each tranche and mapping it to an NAIC Securities Valuation Office (SVO) designation. Compared with the CLO tranches’ existing designations, most tranches originally rated single-A or better saw an improvement in designation (or flat for triple-A), while those rated lower mostly deteriorated, resulting in higher capital charges. As previously reported, shorter-dated tranches “had less onerous capital impacts” than longer-dated ones. Moody’s noted that if the new rules are implemented as proposed by the end of this year, the SVO approach could further incentivize insurers to invest toward the top of the capital structure and also in CLOs “later in their life cycle or in their amortization period.”
- https://www.insurancebusinessmag.com/us/news/life-insurance/stable-outlook-for-life-insurers-as-growth-meets-asset-risks–moodys-516653.aspx – Moody’s has issued a stable outlook for the US life insurance sector in 2025, citing steady economic growth and sustained high interest rates as key drivers. The agency forecasts US economic growth at 2% in 2025 and 1.8% in 2026, while expecting long-term interest rates to remain elevated. This environment is anticipated to bolster investment income and drive product sales, despite challenges such as weaknesses in commercial real estate and rising asset risks. Moody’s projects that US 10-year Treasury yields will remain above 4% in 2025, supported by a gradual easing of monetary policy. The Federal Reserve is expected to lower the fed funds rate by 25 basis points at upcoming meetings, pausing mid-2025 when the rate reaches 3.5% to 3.75%. The sustained rate environment is expected to enhance growth across the sector, particularly in annuities, a focus area for private capital insurers.
- https://www.spglobal.com/market-intelligence/en/news-insights/research/record-resi-investment-changes-nature-of-us-life-industrys-mortgage-holdings – Based on a sum-of-the-parts review of disclosures on Schedule B of annual statutory statements, we found that Athene’s US life units acquired $16.11 billion in uninsured residential mortgages in 2024 and ended the year with uninsured residential mortgage holdings of $30.54 billion. Global Atlantic’s US life companies had acquisitions and holdings of $8.59 billion and $19.88 billion in the asset class. The other US life group with more than $10 billion in uninsured residential mortgage loans on the books of its general accounts at year-end 2024 was Corebridge Financial Inc. with $10.93 billion. Although Athene’s positions accounted for just over one-third of the US life industry’s 2024 uninsured residential mortgage acquisitions and 27.4% of the industry’s holdings, the 2024 expansion was not driven by the Apollo Global Management Inc.-backed group’s growth alone. Uninsured residential mortgage acquisitions for the industry, excluding Athene, surged by 53.4% on a year-over-year basis. The latter change would have been even stronger in the absence of the approximately $3.8 billion in residential whole loans added in 2023 by Teachers Insurance & Annuity Association of America in connection with the sale of its former thrift.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative was published on 24th November 2025, making it current. The earliest known publication date of similar content is 13th December 2024, when the NAIC published a report on U.S. insurers’ CLO exposure. The report is based on a press release, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged.
Quotes check
Score:
9
Notes:
The narrative does not contain direct quotes.
Source reliability
Score:
7
Notes:
The narrative originates from Reinsurance News, a reputable organisation. However, it is a single-outlet narrative, which introduces some uncertainty.
Plausability check
Score:
8
Notes:
The claims made in the narrative are plausible and align with known industry trends. The language and tone are consistent with the region and topic. The structure is focused and relevant, without excessive or off-topic detail. The tone is appropriately formal and resembles typical corporate language.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative is current and based on a press release, which typically warrants a high freshness score. It does not contain direct quotes, and the source is reputable, though a single outlet. The claims are plausible, and the language and tone are appropriate. No significant issues were identified, leading to a PASS verdict with high confidence.