German insurers' private credit hits 9.3% of invested assets

Private credit accounted for about 9.3% of German insurers' total invested assets at the end of 2024, above the European average of 7.5%, according to a Moody's analysis published Oct. 20 and reported by Alternative Credit Investor.

Moody's puts German insurers' illiquid assets at 19.4% in 2025, up from 15.8% in 2019. Most of the increase reflects life insurers trying to honor guaranteed returns on savings products, the rating agency says. Mortgages and loans are the largest part of the illiquid book; infrastructure, private equity and alternative funds are the fastest-growing pieces. Moody's expects higher yields, diversification and long-duration assets to keep supporting illiquid strategies. It expects German insurers to keep raising private credit exposure as Germany's investment needs require more private capital.

German regulator BaFin has increased its scrutiny of insurers carrying significant private-asset exposure, Moody's says. The ability to manage complex portfolios will become a more important credit differentiator. Valuation, liquidity and governance oversight all get harder as the allocation grows.

Allocators sizing evergreen credit funds and BDCs face the same valuation, liquidity and governance questions. The answers depend on terms the manager controls: how often marks are set and by whom, what the redemption mechanism actually permits in a stressed quarter, and who on the valuation committee sits outside the investment team.

Moody's does not read the shift as a credit negative. It expects German insurers' credit strength to remain steady, citing stable liability profiles, strong asset-liability management and a focus on established private credit asset classes. The same note says insurers are expected to help meet Germany's investment needs across infrastructure, defense and digitalization, areas likely to require increasing amounts of private capital.