US state insurance regulators, Treasury secretary meet to discuss private credit

A group of state insurance regulators met with US Treasury Secretary Scott Bessent on May 7 to discuss the life insurance industry's exposure to private credit and the shift of US life and annuity reserves to offshore jurisdictions.

The National Association of Insurance Commissioners (NAIC) said in a release that members were able to "share perspectives" on the relationships between private credit and insurance while also providing information surrounding actions that state insurance regulators have been taking to oversee the industry's risk management and investment practices.

"State insurance regulators have long taken concrete steps to keep pace with insurers' increased exposure to private credit and other market developments," the NAIC said, adding that the forum enabled regulators to "highlight how their collaboration and coordination advances this work."

In a press release, the Treasury Department said that Bessent "emphasized the need for fit-for-purpose regulation that encourages innovation while appropriately managing risk" during the meeting.

"Treasury and the state insurance commissioners agreed to continue staff- and senior-level engagement on topics including the NAIC's work on risk-based capital, private letter ratings, offshore reinsurance jurisdictions, and the oversight of evolving business models," according to the press release.

Exposure to private credit has sparked investor concern across industries as the asset class has seen both an increase in defaults and investor redemptions.

The insurance industry's relationship to private credit has also been under a regulatory magnifying glass as of late, with the NAIC making several changes to the way it analyzes investment risk in an effort to better understand the industry's exposure.