EU Insurers Need to Grasp Private Credit Risks, Watchdog Says

European insurers have to grasp the risks they face when investing in private credit, according to the region’s top watchdog.

Insurance firms need to be able to identify, measure, manage and report the risks, Petra Hielkema, chair of the European Insurance and Occupational Pensions Authority, said in a Bloomberg TV interview on Thursday.

Regulations put in place after the 2008 financial crisis have caused banks to step back from some financing businesses. The strong financial position of European insurers and pension funds coupled with the long-term nature of their liabilities mean they’ve been able to step in to help fill the gap.

That has allowed the industry to diversify investments and reap the higher returns associated with less liquid assets. Regulators recognize those benefits but also want to avoid eroding trust in the sector, should firms run up losses.

Insurers need to develop their models on default probability and losses in the event of a default and data is key, Hielkema said. The firms need a clear understanding of the new liabilities and the associated liquidity risks, she said.

“If the markets become volatile, and they tend to do that these days, we want to make sure that assets and liabilities move in a matched way,” she said.

European insurers had €514 billion ($597 billion) of exposure to private credit, or 5.1% of their assets, at the end of 2024, EIOPA said in December. At occupational pension funds, it amounted to €128 billion, or 4.4% of assets.

Photograph: Petra Hielkema in London, on June 4, 2026; photo credit: Betty Laura Zapata/Bloomberg