At a glance
- A rated note feeder is a special purpose vehicle that issues rated debt, typically senior and junior notes alongside an unrated equity tranche, and invests the proceeds in a private credit fund as a limited partner.
- The capital difference between the two classifications has driven adoption, according to the report.
- Private credit, defined broadly to include private placements and mortgage loans, accounted for an estimated 35% of US life insurance investments at year-end 2025, per Moody's. The NAIC's own estimate puts US insurers' private credit holdings at about $1.2 trillion at the same date, roughly 13% of cash and invested assets.
The NAIC is examining how rated note feeders should be treated under statutory reporting rules, according to Insurance Business America's account of a Moody's Ratings sector study.
A rated note feeder is a special purpose vehicle that issues rated debt, typically senior and junior notes alongside an unrated equity tranche, and invests the proceeds in a private credit fund as a limited partner. That gives the insurer exposure to direct lending, infrastructure and asset-based finance through instruments that qualify as bonds under statutory accounting rules. Moody's finds RNFs are among the fastest-growing fund finance vehicles for US life insurers.
The capital difference between the two classifications has driven adoption, according to the report. A senior note rated A2 carries a 0.82% risk-based capital charge for a life insurer under NAIC rules, against 30% for a direct fund investment reported on Schedule BA — roughly 36 to one.
Aggregate insurer allocations to fund finance rose to 1.9% of cash and invested assets in 2025 from 1.3% in 2024, a 0.6 percentage point increase, according to Moody's survey of rated US life insurers.
That is a thin share of a large market. Private credit, defined broadly to include private placements and mortgage loans, accounted for an estimated 35% of US life insurance investments at year-end 2025, per Moody's. The NAIC's own estimate puts US insurers' private credit holdings at about $1.2 trillion at the same date, roughly 13% of cash and invested assets.
The disclosure gap inside the structure
RNF ratings are typically assigned on a private letter basis, so the rating, its rationale and the underlying portfolio are not publicly disclosed. Moody's notes that this limits regulators, counterparties and outside analysts from independently assessing credit quality, and that inconsistent statutory reporting across the industry can obscure the true scale of the exposure. The structures embed credit protection including subordination, overcollateralization and cash sweep triggers.
The review arrives as the NAIC extends what its capital rules reach. In September, as this publication reported, the Life Risk-Based Capital Working Group was instructed to develop a capital charge for cessions outside reciprocal jurisdictions; the NAIC's $1.2 trillion private-credit perimeter letter to Senator Warren put ratings and valuation reviews onto ceded books. As this publication argued in September, the general account's constraint is capital text, not yield — and the text governing a 30% versus 0.82% differential is now the subject of a review.
A senior note rated A2 carries a 0.82% risk-based capital charge for a life insurer under NAIC rules, against 30% for a direct fund investment reported on Schedule BA — roughly 36 to one.
Reported by the Insurance regulation desk from Insurance Business America and Moody's Ratings sector-in-depth report (cited via Insurance Business America). Published . Corrections