Insurance - Life/Annuity: Private Credit: Death of Insurance Has Been Greatly Exaggerated

Research evidence excerpt

Insurance - Life/Annuity: Private Credit: Death of Insurance Has Been Greatly Exaggerated

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May 28, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMInsurance - Life/Annuity | North America Bob Jian Huang

Equity Analyst

Private Credit: Death of Bob.Huang@morganstanley.comMichael J. Cyprys, CFA, CPA +1 212 761-6136

Michael.Cyprys@morganstanley.com +1 212 761-7619

Insurance Has Been Greatly Jie Cheng

Research Associate

Jie.Cheng1@morganstanley.com +1 212 761-3878

Exaggerated Annalei E Davis

Annalei.Davis@morganstanley.com +1 212 761-1736

Private credit remains a headline risk for life insurers. As most Barron Thomas

companies disclosed private credit exposure, allocation, and IG ResearchBarron.Thomas@morganstanley.comAssociate +1 212 761-2624

quality, we stress‑tested capital resilience; the results indicate Joseph Tumillo, CFA

that excess capital is sufficient to absorb downturn losses ResearchJoseph.Tumillo@morganstanley.comAssociate +1 212 761-2144

without cuts to dividends or buybacks.

Insurance - Life/Annuity

North America

Overview: Life insurance stocks have been out of favor since 2H25 due to private Industry View Attractive

credit headlines. The market is penalizing life insurers for increasing private credit

allocation, lack of consistent and transparent disclosure on private credit

investments, the possibility of inflated ratings and reliance on private letter rating,

life insurers' exposure in BDC fund, use of rated note feeders, and the potential

impact on capital position in the event of a private credit downturn. We analyzed life

insurers' and PE-backed annuity writers' private credit portfolios and performed a

stress test based on past three major credit cycles to assess companies' pro forma

excess capital.