9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — explore the full collection here.

In the last decade, life insurers looking to boost their returns and shore up their liabilities have significantly ramped up their exposure to private markets. These LPs have favored private credit in particular, funneling more capital into the asset class than ever before. A recent Moody’s report estimates that the US life insurance industry allocated up to a third of its roughly $6tn in assets to private credit products in 2024.

9fin sat down with Matt Harvey, executive managing director and head of middle market direct lending for PGIM Private Capital, to talk about what’s behind insurers’ appetite for private credit and how asset managers are meeting their needs in today’s market.

1. What’s driving demand for private credit among life insurers?

Private credit has always been a natural fit for insurers, as they seek to earn the illiquidity premium often associated with private credit assets, matching the relative illiquidity of their liabilities. This natural relationship has meant insurers have always been one of the biggest investors in private credit. During the lower-for-longer era, insurers significantly increased their strategic asset allocations to direct lending. The more recent development of rated feeder structures offered improved capital efficiency, and this has added to the flow of insurance capital into private credit. Meanwhile, private credit has grown and expanded, becoming a much larger investment allocation for insurers than in the past.

2. How has your approach to origination, underwriting, and borrower relationships had to evolve in today’s market?

All of these are critical elements of our investment process, and we invest in them constantly. In our private credit business, there is a fundamental relationship between access, complexity, and illiquidity relative to return. This relationship is particularly evident within the middle market. Success in the middle market requires long-standing relationships with businesses and an origination network deep enough to source credit assets globally and consistently over time. By maintaining a local presence and strong relationships with businesses, we are better placed to achieve attractive pricing and terms. Success also relies on experience across credit cycles. Private credit managers must be able to originate, underwrite, and manage loans through cycles to deliver for investors.

3. Are you doing more originations in the current market environment? Why or why not?

From 1 April, we observed a slowdown in deal activity for about two months. However, we’ve seen a resurgence in momentum in recent weeks. During the first half of 2025, we originated $6.7 billion in loans across our private credit business. In general, during times of uncertainty and volatility, we benefit from the strong relationships we have with borrowers who value the partnership and long-term relationship, especially when the market or economic backdrop becomes more challenging.

4. What are the demands of insurance LPs compared to pension funds or endowments and foundations?

Generally, all institutional investors share certain demands: value for fees, consolidation of managers, specialized structures, and attractive risk-adjusted returns. Insurance investors, however, typically require additional considerations, such as duration management, yield objectives, cash flow requirements, gain/loss constraints, and regulatory considerations. Insurers focus more on fund structures due to regulatory matters regarding capital charges and seek capital-efficient structures (like rated feeders) to address this. Given their typically long-term liability structure, insurance companies prioritize long-term assets, stability, and structures that ensure lower risk-based capital charges, often favoring fixed-rate instruments. By contrast, endowments and foundations are generally more flexible and opportunistic strategies.

5. Do you see the value of creating private credit vehicles specifically for life insurers?

Yes. Insurers are becoming increasingly discerning in their needs and require bespoke solutions, including products and vehicles tailored specifically to them. They favor longer-duration assets to match their longer-dated liabilities and especially prefer fixed-rate coupons for stability. Rated feeders are predominantly purchased by insurance companies due to their risk-based capital efficiency.

6. Do you see insurance LPs investing only in funds or co-investments in addition to originating their own deals?

Insurers are exploring all of these structures. They are formulating investment strategies to meet a diverse range of outcomes and will consider a variety of structures and arrangements to achieve those goals. Variety is key for insurers.

7. Are more insurance funds investing directly in those direct lending deals?

In the US and other jurisdictions like Bermuda, insurance companies increasingly invest via structures like rated feeders rather than directly into loans. That said, many still invest directly (or co-invest directly) through separately managed accounts with asset managers. Recently, in these direct mandates, we’ve seen increased interest from insurance investors wanting the underlying loans independently rated for regulatory capital purposes.

8. What are the benefits of this for life insurance companies and asset managers?

Insurance companies benefit from both direct SMAs and co-investment mandates with asset managers. Direct SMAs allow customized solutions for insurance companies to access private credit while addressing their regulatory requirements. Co-investment mandates enable life insurers to access larger deals they can diligence and approve directly. This provides them with better upfront information on the borrower and typically comes with reduced fees. For asset managers, the benefits include access to more capital and the ability to pursue and lead larger transactions with high certainty of execution.

9. What’s your ideal summer vacation?

A mountain with clear skies and fresh air!