Article ID: 9d6137c690fb9a380ac778e86f9d64f7d170ede3a886ce5b099665062be79988
Source ID: secondary:businessinsurance.com
Published At: -
Extraction Method: bs4_heuristic
URL: https://www.businessinsurance.com/private-credit-turmoil-stokes-worries-among-insurers-regulators/
Body Text
Private credit turmoil stokes worries among insurers, regulators - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Private credit turmoil stokes worries among insurers, regulators by Richard Sine D&O , Emerging Risks , Risk Management May 26, 2026 Signs of stress in the $1.7 trillion private credit market are drawing the attention of insurance underwriters and regulators, while brokers warn of coverage and compliance gaps among lenders and borrowers. A month after the September 2025 bankruptcies of auto lender Tricolor Holdings and auto-parts manufacturer First Brands, JPMorgan CEO Jamie Dimon warned that more “cockroaches” could emerge due to lax lending standards. Early this year, Blue Owl Capital permanently halted redemptions for a $1.6 billion fund as redemption requests rose across the industry. In March, a Pimco analyst warned of a “reckoning” in the industry prompted by “a crisis of really bad underwriting.” Private credit lenders such as Blue Owl, BlackRock, and Hercules Capital have marked down their loans and have been battered by share-price declines and securities class actions by investors alleging negligence or misrepresentation. In early May, a lawsuit was filed against a Kohlberg Kravis Roberts & Co. private credit venture alleging it overstated asset valuations. Private credit, which typically refers to loans made to mid-market businesses by non-banks, has grown more than fivefold since 2009, according to the U.S. Federal Reserve. Analysts worry about opaque, sometimes conflict-ridden business models among lenders, and heavy exposure to technology and services, which are areas vulnerable to artificial intelligence-driven disruption. Regulators have taken notice: on May 4, U.S. Securities and Exchange Chairman Paul Atkins said the agency is investigating allegations of fraud in private credit, without naming specific firms. Investors, lenders and borrowers in private credit are facing greater scrutiny from insurers. Underwriters are considering how tighter credit could affect their exposure to industries under pressure, such as software and automobiles, as well as to different players such as investors and borrowers, says Bryan Boyle, New York-based financial lines executive at insurer MSIG USA. “Private credit could affect multiple insureds across multiple segments. There’s some parallels to other asset classes, such as commercial real estate during COVID … or the regional banking crisis,” he said. Premiums are rising for general partnership liability policies for private equity and alternative asset management firms, said William Fahey, managing director at Marsh in New York. The policies protect partners from an investor lawsuit or a regulatory investigation. The market has started hardening even for private lenders without a portfolio of companies, Mr. Fahey added. “None of (these policies) made money and some of them have lost a lot of money,” he said. Private credit loans are popular with high-growth, high-debt companies that have been turned away by traditional banks, Mr. Fahey added. Underwriters will scrutinize these companies’ loans for covenant breaches or other signs of distress. That scrutiny is likely to be even heavier for software-as-a-service companies, which some investors worry will soon be displaced by advances in AI. When private credit loans go south, D&O can protect boards and top management, while professional liability insurance protects personnel who are accused of bad decisions, such as inadequate due diligence or risk disclosures. Credit risk insurance protects lenders from non-payment of an insured loan. In a recent webinar, a Willis Towers Watson executive said inquiries about credit risk insurance had increased recently. With both government and private plaintiffs trying new legal tactics, corporate risk managers should ensure that their D&O policies cover a wide variety of events, such as investigations from state or federal agencies, allegations of antitrust of False Claims Act violations, and congressional hearings, said Sarah Abrams, co-author of the widely-read blog D&O Diary and a Chicago-based executive vice president at RT ProExec. Sustained high inflation or high interest rates will put further strain the private credit market, Ms. Abrams said. More borrowers are resorting to payments-in-kind rather than cash to repay debts, another sign of market stress. Business development companies typically determine the fair value of the same privately held companies they lend to, creating a potential conflict of interest, added Ms. Abrams. This structure could leave a firm vulnerable to charges of securities fraud. If regulators crack down on lenders, they’re likely to focus on whether valuation committees are truly independent, Ms. Abrams said. “They don’t want to see that this committee is just rubber-stamping asset valuations. They’re going to ask if they are really challenging some of what they saw.” Highly indebted borrowers face their own risks if their private-credit lenders come under stress, she said. “It’s good corporate hygiene to know: What is your leverage, what are the maturities, how much liquidity is available? How is your company valued (by the private credit lender), and does that need to be reconsidered given macroeconomic factors?” Private credit provides an important service for companies that have otherwise struggled to find credit, Mr. Fahey said. But “it grew so fast over the last few years that regulatory oversight hasn’t kept up with it.” “We’re going to find out this year,” Mr. Fahey predicts, if lenders have put adequate governance in place. Related News ‘Full Tilt’ arcade operator loses trademark coverage fight May 26, 2026 Mid-year renewals down 20% as cat bonds pressure market May 25, 2026 South Korean insurers back $199M Hormuz cover May 25, 2026 Mine blast kills 82, exposes major violations May 25, 2026 Air France, Airbus found guilty in AF447 crash May 25, 2026 Cat bond issuances near $16.3B May 25, 2026 Salama’s profit surges despite revenue decline May 25, 2026 Shell emissions case reaches Dutch Supreme Court May 25, 2026 State high court revives claims against former insurance agency staff May 22, 2026 Facebook-f X-twitter Linkedin-in Business Insurance is a singular, authoritative news and information source for executives focused upon risk management, risk transfer and risk financing. Never miss important news: Become a Business Insurance Online subscriber today Subscribe Now Information About Us Contact Advertise Privacy Policy Terms & Conditions Copyright 2026. BUSINESS INSURANCE HOLDINGS Member, Beacon International Group, Ltd.
Metadata (JSON)
{
"score": 21.466666666666665
}