North American life insurers are accelerating private credit allocations through partnerships with alternative asset managers, targeting higher yields to back fixed index annuity products. North American Company for Life and Health Insurance, one of the largest FIA issuers in the U.S., launched new index products with Annexus designed to diversify client portfolios with growth-focused strategies showing low correlation to traditional indices.
Tom Haines, speaking for North American, said the new indices "enhance diversification opportunities for agents and their clients with North American Secure Horizon FIAs" and complement existing portfolio options through reduced correlation.
The strategy reflects broader industry momentum as insurers hunt yield in a challenging rate environment. Private credit markets offer spreads 200-400 basis points above traditional fixed income, critical for supporting FIA crediting rates that attract retail investors.
European insurers show divergent approaches. Axa CEO Thomas Buberl stated the company's private credit exposure remains "far below" rivals, signaling caution on concentration risk. Allianz takes the opposite stance—investment chief Claire-Marie Coste-Lepoutre said the firm is "very comfortable" with its private credit position and continues expanding allocations.
The geographic split suggests regulatory and risk management philosophies differ across markets. North American insurers face less restrictive capital requirements for private assets, enabling aggressive alternative partnerships. European Solvency II rules impose steeper capital charges on illiquid assets, though some insurers like Allianz accept the cost for yield pickup.
Alternative asset managers benefit from these partnerships through stable, long-duration capital. Insurance balance sheets provide patient funding for private credit strategies, reducing redemption risk compared to retail alternative funds. TPG, T. Rowe Price, and Third Point gain access to billions in committed capital for direct lending, distressed credit, and specialty finance deals.
FIA product growth drives the allocation shift. Annuity sales surged 23% in 2025 as consumers sought principal protection with equity-linked upside. Insurers need higher-yielding assets to fund crediting rates while maintaining spreads. Private credit, infrastructure debt, and structured products fill this gap better than investment-grade corporates yielding 4-5%.
Risk management remains critical. Insurers use reinsurance transactions to offload tail risk and employ strategic divestitures to rebalance portfolios when private asset concentrations exceed internal limits.
