Yes, and it has grown fast. US life insurers carry roughly $2.4 trillion (about 7.5% of US GDP) of exposure linked to private credit and offshore reinsurance, split two ways: about $1.2T onshore in the Fed Z.1 "unidentified miscellaneous assets" bucket (its catch-all for private credit, PE, BDCs and other alternatives), up from $649B in 2021; and about $1.2T of reserves ceded to non-US reinsurers, mostly Bermuda and Cayman captives, up from $584B. Both nearly doubled in five years.
The red flag is the structure, not the practice: private equity often owns both sides - the insurer and the credit fund it lends to (Apollo/Athene, KKR/Global Atlantic) - with roughly 20% of some insurers' investments going to affiliated funds and marking their own Level 3 loans. Moody's estimates about a third of the $6T US life insurers hold is now private credit. The systemic worry is a slow doom loop: if retirees surrender annuities, insurers must liquidate illiquid private credit into a falling market.
The data (Fed Z.1, 73 series, 104 quarters, validated against the Fed L.116 table) is live: https://www.tigzig.com/tremor (US Insurance). Full analysis with all sources: https://www.tigzig.com/post/us-life-insurance-red-flag-private-credit-offshore. Related: what is happening in private credit https://www.tigzig.com/agents-faq/what-is-happening-in-private-credit-shadow-lending.
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