Chicago Fed research points to systemic risk from private credit

Life insurers that have tripled exposures could face a liquidity squeeze, say economists

Chicago Federal Reserve

Economists at the Federal Reserve Bank of Chicago have warned of the potential for systemic risk stemming from the rush of life insurers into private credit.

In a note published on May 16, the researchers raise concerns about life insurers’ ability to sell privately placed credit instruments in challenging periods.

Ballooning allocations – in particular, to ‘esoteric’ private credit – could be hard for firms to exit should those firms face a wave of surrenders from policyholders, the economists