US life insurers used third-quarter earnings calls to assure investors that they have a good handle on where their money is being allocated, from investments in private credit to developing and enhancing in-house AI tools.
Private credit has come under greater scrutiny following the September bankruptcy filings of aftermarket automotive parts supplier First Brands Group LLC and car retailer and lender Tricolor Holdings LLC.
The US life insurance industry had $83.5 million in direct exposure to first- and second-lien term loans of First Brands and $96.5 million in exposure to Tricolor-sponsored subprime auto loan securitizations. In earnings calls, life insurer executives worked to assuage investor concerns about private credit exposure, with many saying they were confident in the strength of their investment strategy.
The rise of alternative investments and private credit has caught the attention of the National Association of Insurance Commissioners, which is pursuing an array of regulatory changes, including the development of an updated system to evaluate insurers' investments.
Private credit strategies
Equitable Holdings Inc. CFO Robin Raju described private credit and broader credit as a "good asset class" for the insurer's clients, noting that Equitable's fixed maturity portfolio is primarily comprised of investment-grade assets rated by one of the three main rating agencies. Raju emphasized that Equitable does not just rely on ratings but also on the underwriting abilities of its general account team.
"This is a business in insurance that we have sticky liabilities and where you want to take some liquidity risk," Raju said. "And as a result, private credit is an attractive asset class that matches well with our liabilities."
Aflac Inc. also highlighted the strength of its private credit strategy, with CFO Max Brodén saying he was confident Aflac's portfolio would perform well in a downturn, as he had been "very cautious" in designing its exposure.
Commenting on the credit cycle, Brodén said he did not see anything "systemic" that would indicate the start of a "serious" credit cycle.
"Corporate balance sheets remain strong," Brodén said. "We've not seen a discernible trend in downgrades or credit deterioration across our portfolio in our structured private credit space, all of our holdings are performing in line with expectations."
Prudential Financial Inc. CFO Yanela Frias said the insurer's private credit portfolio has "consistently performed better than equally rated publics during economic downturns," noting that the majority of Prudential's corporate private credit securities are investment grade.
Asked if Prudential was interested in emerging types of private credit assets such as residential mortgage loans, asset-backed lending, middle-market loans and infrastructure, Frias said that the insurer works to "always evaluate new asset classes."
Principal Financial Group Inc. executives expressed optimism about the real estate market during the insurer's third-quarter earnings call, with Principal Asset Management President and CEO Kamal Bhatia saying that Principal Financial is taking advantage of "increased momentum" in the real estate market.
"I think the cycle is slowly turning, but the more impressive piece for us is we are actually gaining market share, which I expect to continue as we expand our product lineup," Bhatia said.
The uptick in enthusiasm about the real estate market is rippling across life insurance companies, as was evident during S&P Global Market Intelligence's Oct. 9 Insurance Investment Symposium, where several life insurance executives flagged the real estate space as a "big opportunity" in the fixed-income market.
AI acceleration
AI has been a big theme in insurance earnings calls throughout 2025, and the third quarter was no exception.
MetLife, Inc. CEO Michel Khalaf said the insurer's in-house AI platform, MetIQ, contributed to a lower direct expense ratio in the third quarter. MetLife spent $3 billion over the past five years to overhaul its technology.
Khalaf said that MetIQ blends generative, agentic and classic AI capabilities that work together to assist in areas such as app development, customer service and employee tools.
Prudential's management said during its third-quarter call that the life insurer is ramping up its investments in AI with an aim to improve core capabilities, including enhancing customer and adviser experiences and increasing efficiency.
"There's no difference between business and technology today," Prudential CEO Andrew Sullivan said on the call. "So the level of investment is significant, and we feel it's appropriate and provides great return to the shareholder.
Other business
A major deal was revealed during the third-quarter earnings season when Brighthouse Financial Inc. announced Nov. 6 that it would be acquired by Aquarian Holdings LLC for about $4.1 billion. The transaction is expected to close in 2026.
Brighthouse canceled its earnings call after the announcement, and the insurer's shares shot up in value. Keefe Bruyette & Woods analyst Ryan Krueger said in a research note that he believes this is "by far the best outcome available for Brighthouse shareholders."
Meanwhile, Unum Group took an after-tax reserve increase of $377.8 million in the third quarter, and as a result of its annual actuarial review, it also announced plans to obtain $522.7 million in additional actuarial-justified premium rate increases for its long-term care block.
