Axa's private credit exposure remains far below competitors, CEO Thomas Buberl confirmed, as European insurers adopt a measured approach to alternative assets. Allianz chief investment officer Claire-Marie Coste-Lepoutre said the company is "very comfortable" with its current position in private credit markets.
The cautious stance contrasts sharply with North American insurers, who are forming deeper partnerships with alternative asset managers including TPG, T. Rowe Price, and Third Point. North American Company for Life and Health Insurance, one of the largest fixed index annuity issuers in the US, is expanding product offerings tied to alternative investments.
Fixed index annuities require higher-yielding assets to support crediting rates promised to policyholders. Tom Haines, a company executive, noted new index options provide "low correlation to other indices in the portfolio," enhancing diversification for agents and clients.
European insurers face stricter Solvency II capital requirements that make private credit allocations more expensive from a regulatory capital perspective. The framework penalizes illiquid assets more heavily than comparable US regulations, creating structural barriers to aggressive expansion.
Private credit markets have grown rapidly as banks retreated from corporate lending following post-2008 regulations. The asset class now exceeds $1.5 trillion globally, offering yields 200-400 basis points above public credit markets.
European insurers are managing expansion through reinsurance transactions and strategic divestitures rather than direct portfolio builds. This allows participation in private credit returns while transferring capital strain and liquidity risk to reinsurers.
The competitive gap raises questions about European insurers' ability to match North American peers on product competitiveness. Lower investment yields translate to less attractive crediting rates on savings products, potentially driving market share losses in retail insurance markets.
Regulators are reviewing Solvency II private asset treatments, with potential reforms expected by 2027. Any easing of capital charges could accelerate European insurer allocations to private credit and narrow the transatlantic divide.
