A decade-long surge in private holdings has drawn the Treasury and state regulators into a closer look at how insurers manage the risk.

June 11, 2026

The chief executive of Ares Management used a New York investor conference to make two points at once: insurers have little practical choice but to rely on private credit, and the heightened regulatory interest now trailing that reliance is something the industry should embrace rather than resist. Michael Arougheti made the remarks at Morgan Stanley’s U.S. Financials gathering, in comments relayed by Reuters.

An argument about capacity

His central argument turned on size. Listed markets, Arougheti suggested, are too small to throw off the kind of yield insurers must earn to keep pace with the payouts they have promised customers. Private lending fills that gap, becoming a primary engine of the additional return that life and annuity providers have leaned on through years of depressed rates.

He saw no contradiction between that dependence and the regulators now circling. The deeper insurers wade into private assets, he argued, the more officials will reasonably press for clarity on how the deals are assembled and whether they hold up. To him, that pressure registers as healthy, not hostile.

A decade of fast growth

The figures behind the concern are striking. AM Best, which rates insurers and tracks the sector, reports that the share of life and annuity portfolios devoted to private credit is now well over twice its size of a decade ago, an expansion that unfolded while benchmark rates lingered near record lows.

Washington takes notice

Treasury Secretary Scott Bessent has opened a dialogue with state insurance regulators about firmer supervision. Their worries run in several directions:

• Whether the structures are transparent enough;
• Whether underwriting standards are slipping as money floods in;
• What it signals that some affluent investors have begun retreating from the very funds that first handed them a way into this hard-to-exit corner of the market.

A wider pattern

A sharper lens on the assets themselves is surfacing across structured finance more broadly. The BODI Commercial Mortgage Trust 2026-DC1 transaction, secured by Blue Owl Digital Infrastructure’s hyperscale data center in Virginia, recently cleared with preliminary ratings on the strength of a single property fully occupied by a hyperscale tenant under a lengthy lease. Analysts pointed to the tenant’s strength, a conservative debt load, and deep demand for data-center space as the pillars of the deal, the same asset-first scrutiny now being trained on what insurers hold.