US Treasury to Hold Talks With Insurance Regulators on $2 Trillion Private Credit Market

Private credit, in which nonbank institutions lend directly to companies, has grown into a $2 trillion market. Life insurers have sharply increased their allocations in recent years in pursuit of higher returns and have transferred assets through offshore reinsurance. Because information on loan valuations, ratings and liquidity is less transparent than in public markets, and links with banks, pension funds and insurers are deepening, risks could spill into the regulated financial system.

The US Treasury Department announced on April 1 that it would convene domestic and international insurance regulators for talks from April through early May. On May 7, Treasury Secretary Scott Bessent met with state insurance commissioners and the National Association of Insurance Commissioners, or NAIC. The discussions focused on shifting life insurance and annuity reserves offshore, risk-based capital, private credit ratings and regulatory coordination. The parties agreed to continue discussions among both senior officials and staff.