Insured momentum: Accelerating private credit growth

Wednesday, July 10, 2024

We recently had a panel discussion on the intersection of private credit and insurance company capital. Speakers from DLA Piper and prominent industry players such as Ares Management, Aquarian Holdings, New Mountain Capital, Assured Guaranty and Kroll will explored how insurance company capital has propelled the growth of private credit in recent years and delved into the various strategies asset managers employ to attract these investors. The intended audience for this event was for investors, fund managers, and other members of the private credit industry.

Speakers:

• Moderator: Ryan Moreno, Partner, Private Credit and Fund Finance, DLA Piper
• Grant Buerstetta, Partner, Structured Finance, DLA Piper
• John Reiss, Partner, Investment Funds, DLA Piper
• Kathleen Birrane, Partner, DLA Piper and former Maryland Insurance Commissioner
• David Ells, Partner and Portfolio Manager, Ares Management
• Steve Kahn, Senior Managing Director, Assured Guaranty
• Cyrus Moshiri, Director, New Mountain Capital
• Gopal Narsimhamurthy, Global Head of Fund Ratings, KBRA
• Jagan Pisharath, Partner and Chief Financial Officer, Aquarian Holdings

Location

DLA Piper
1251 Avenue of the Americas
New York, NY 10020
Directions

• Understanding the National Association of Insurance Commissioners (NAIC) and state regulatory framework for US insurance companies, including risk-based charge (RBC) requirements, is important as this is a key driver for many of the structures that asset managers are using to get insurance company capital in the door.

• We’ve seen a recent evolution with rated feeders (we’re calling it the “rated feeder 2.0”) that employ CLO-like technology with additional tranching and optionality for investors to pick and choose particular tranches rather than being required to purchase a vertical strip of all tranches.

• The NAIC adopted a “principles-based bond definition” effective on January 1, 2025, which involves a series of revisions to accounting rules (SSAPs) designed to incorporate consideration of substance, rather than legal form, into assessments of financial instruments. While there was some market trepidation about this at first, the NAIC has issued guidance that rated feeders on top of credit fund structures won’t be subject to challenge due to the definition change.