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Life Insurers’ Private Credit Investments and Annuity Market Share Capture

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Abstract

We show that life insurers have increased their lending in the private placement market over the past decade, totaling $849 billion, or 14%, on life insurers’ balance sheets in 2024. A substantial part of the growth stems from private credit extension to financial borrowers and to privately placed asset-backed securities. We document that private equity-owned (PE-owned) life insurers drive these trends. We also provide evidence that these investments have about 80 basis points higher spreads compared to public bonds and foster PE-owned insurers’ growth in the annuities market. A one standard deviation increase in financial private placement investments is associated with 0.05 percentage points higher market share in the annuities market.

Suggested Citation

  • Ralf R. Meisenzahl & Jackson Overpeck & Andy Polacek, 2025. "Life Insurers’ Private Credit Investments and Annuity Market Share Capture," Working Paper Series WP 2025-09, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:101280
    DOI: 10.21033/wp-2025-09
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    References listed on IDEAS

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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