Investors are increasingly avoiding insurers with heavy private credit exposure, according to a Berenberg private bank study. Stock prices have fallen since the Iran conflict outbreak. Regulators warn of insufficient risk understanding.
Regulators have warned of inadequate risk understanding among some insurers regarding the private credit market. Nevertheless, the companies are likely to expand their investments there, even as it pressures share prices, per a Berenberg study. Since the Iran conflict outbreak, investors have shifted away from insurers with significant private credit risks in their portfolios, favoring those with negligible exposure. British motor insurers like Admiral, Nordic insurers, and reinsurers benefited, while major players [unnamed] lost favor. “The market is concerned about potential default risk,” said Berenberg analyst Michael Huttner. The market for non-bank corporate loans has grown strongly, especially in the US, attracting German and European insurers. Higher complexity and illiquidity yield attractive returns, explained Christian Badorff of Moody’s. The study reflects this in share price trends.
