Ares backs private credit role for U.S. insurers as regulatory scrutiny grows
As insurers seek higher returns to meet long-term obligations, private credit remains a key part of how they fund policyholder payments in the U.S. Ares CEO Michael Arougheti says closer regulatory attention to those investments is appropriate as insurance groups deepen their exposure to private markets.
Highlights
- Ares' Arougheti told the Morgan Stanley U.S. Financials conference that insurers increasingly need private credit for returns beyond what traded markets offer.
- U.S. life and annuity insurers' private credit holdings have more than doubled over the past 10 years as low interest rates persist, per AM Best.
- Regulatory scrutiny of insurers' private credit exposure is rising, with Treasury Secretary Scott Bessent consulting state commissioners on transparency and risk oversight.
Private credit demand and oversight focus
As reported by Reuters, Arougheti tells the Morgan Stanley U.S. Financials conference in New York that insurance companies need private credit to generate excess returns, arguing that traded markets are not large enough on their own for insurers to meet policyholder objectives.He says added scrutiny from regulators should not be seen as negative for the sector. In his view, as insurers continue to lean into private markets investing, regulators will want greater transparency on structures and performance, and that is appropriate.
Implications for the U.S. insurance sector
U.S. life and annuity insurers' private credit holdings have more than doubled over the past 10 years while official interest rates remain historically low, according to ratings company and insurance industry specialist AM Best.Regulatory attention is also increasing. U.S. Treasury Secretary Scott Bessent has consulted with state insurance commissioners to improve oversight amid concerns about transparency, lending discipline, and a pullback by wealthy individuals from funds that gave them access to the relatively illiquid asset class.
Our earlier coverage of Blue Owl Digital Infrastructure’s Virginia hyperscale data center financing outlined how the BODI Commercial Mortgage Trust 2026-DC1 transaction moved forward with provisional ratings backed by a fully leased asset and a long-term hyperscale tenant. We noted that the deal’s credit profile was supported by the tenant’s credit quality, the liquidity of the data-center market, and moderate leverage—an example of how private, structured financing is being assessed through a tighter focus on underlying asset performance and risk.
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