Private credit: a new route to insurers

Partners Group has raised $510 million from US insurers through a feeder vehicle that issues debt. The arrangement connects private loans with the requirements of insurance balance sheets. To assess its strength, follow the claims on the money, who takes the first loss, and when payments fall due.

Documentary investigation as of 27 October 2026. The published features of Partners Group’s transactions, US rules and illustrative examples are identified separately. Sources and methods accompany all five illustrations.

On 22 October, Partners Group announced that it had raised $510 million through a second rated feeder, a vehicle that finances an interest in a fund by issuing debt. The participating US insurers bought investment-grade notes, assessed as carrying relatively low credit risk, junior notes and, in some cases, equity. Together with the January transaction, this brings the group’s stated capital raised through these structures in 2026 to $875 million. 1

The significance of the transaction lies in how it allocates claims. A company borrows; a fund holds the loan; another vehicle holds an interest in the fund; an insurer buys a note issued by that vehicle. Each contract determines who gets paid, from which resources and at what time. The note’s protection is built through those connections. They also contain the questions still to be answered.

For an insurer, the objectives are to earn income from private loans and hold that exposure within the constraints of its balance sheet. For the manager, the vehicle brings an existing strategy to more investors. The useful unit of analysis is the claim held at each level. The same collection of loans can support securities with very different risks.

$510 million, several kinds of risk

The October amount covers several forms of financing. Their respective sizes, precise ratings, rating agency, coupons and maturities would require more detailed documents. The announcement establishes the amount raised and the categories of securities purchased. How much protection each category receives remains to be documented. Investment-grade notes form one part of the $510 million; junior notes and equity complete the fundraising. 1

The precedent announced on 21 January provides more detail. Barings reported a financing supporting a $365 million investment in Partners Group Private Loans SICAV-SIF. Barings supplied all the investment-grade loans, while several institutional investors provided credit enhancement: additional protection for the lenders. The named rating agency was DBRS. The published amount describes the investment supported, without a breakdown between debt and protection. 2

That distinction guides the documentary investigation. The Luxembourg fund named in January has an accessible prospectus describing its own operating rules. Assessing the October vehicle would require its contracts and rating report. Reading the two announcements together tells us about a strategy; each financing still has its own terms and investors.

The $510 million therefore describes capital raised at the investor level. Following that money through to companies would require information about subscriptions into the fund, its cash, loan purchases and reinvestments. Adding the fundraising amount to assets already held by the fund could double-count exposures. That distinction matters when the same underlying investments appear in several forms in financial statistics.

From loan to note: two orders of priority

A feeder acts as an intermediary. In the structure described by S&P, its assets are interests in a master fund, financed with debt and equity. Payments from the portfolio move through this chain before being allocated among the feeder’s investors. A vehicle holding the loans directly has a different legal architecture. 3

Consider the position of a company’s lender. Security over the company’s assets may improve recoveries if it encounters difficulties. Those proceeds first belong to the fund holding the loan. To reach the feeder, the money must then become a distribution available to the fund’s investors. The fund’s expenses, commitments and any creditors matter at this stage.

The feeder’s senior note has priority within the feeder. Any debt at the master fund sits ahead of distributions to the fund’s investors. Fitch explicitly addresses this layer of debt in its criteria and distinguishes the repayment sources of different financings. Two uses of the word “senior” can therefore coexist, each attached to a particular entity and contract. 4

Method and scope

Generic architecture based on public S&P and Fitch criteria. Links represent claims and payment priority, without quantitative proportions. The October vehicle’s terms would require its contracts.

This structure can serve a straightforward purpose: offer cautious investors a priority claim on cash flows, while paying more to those accepting the first losses. The strength of that claim depends on the amount protecting it, the quality of the assets and the conditions under which money can move through the structure.

The scope of the rating also matters. The SEC describes a credit rating as an assessment of credit risk. Whether a security can be sold quickly at a satisfactory price requires a separate assessment. An investor can hold a claim well protected against default and still face a thin market when trying to sell it. 5

Protection starts with the first loss

A small hypothetical balance sheet makes the mechanism clearer. Imagine a feeder financed with 100 units: 60 of senior debt, 20 of junior debt and 20 of equity. At the end, the available net cash is distributed in that order. The calculation excludes interest, feeder expenses and interim payments. Obligations at the master fund have already been settled before the feeder receives this cash. The figures are illustrative; they are not the tranche sizes or expected recoveries of Partners Group’s transaction.

If the vehicle recovers 90, both debts can be repaid in full. Equity receives 10 and absorbs the entire loss. With a recovery of 75, equity is wiped out; junior debt receives 15 of its 20, while senior debt recovers all 60. At 50, the 40 subordinated units have been exhausted and senior debt also loses 10.

Method and scope

For final net cash R between 0 and 100: senior = min(R, 60); junior = min(max(R − 60, 0), 20); equity = max(R − 80, 0). Total loss is 100 − R. Senior losses start above 40 units of total loss. The model excludes default probabilities, interest, taxes, foreign exchange, time, feeder expenses and interim payments. Master-fund debts and expenses have already been deducted from R.

Senior protection is real in this example: other investors agree to be paid after the senior lender. It also has a precise limit. Losses exceeding the cushion of 40 reach the senior claim. How often that might happen would depend on the assets, the relationships between their risks and the contract. This example allocates losses; it does not estimate their probability.

The analysis changes if one insurer owns every layer. In this hypothetical balance sheet, owning all the securities means bearing the vehicle’s total loss, however it is allocated internally. Holding only senior debt creates a different exposure. Subordination changes how losses are allocated between claims. When all those claims are held together, it does not change their combined exposure to the same assets. Assessing economic protection therefore requires the actual positions held and their proportions.

The 100 units are a reference amount compared with the cash ultimately recovered. A fall in net asset value, or NAV, can change the estimated value of the assets or trigger a contractual provision. Actual cash proceeds emerge when assets are realized. Moving straight from a valuation change to a final loss on the notes would skip crucial stages: time, recoveries and the terms of repayment.

Regulatory capital follows three decisions

A US insurer also considers the capital it must hold against an investment. This calls for three successive assessments: the security’s accounting classification, its credit designation and the capital formula applicable to the portfolio. The stages answer different questions: what kind of asset the insurer holds, how its credit quality is treated, and how that exposure contributes to the insurer’s overall capital requirement. NAIC rules provide a common framework for supervision carried out by individual states. 17

The first assessment examines the substance of the claim. Effective from 1 January 2025, the principles-based bond definition in SSAP 26 considers, among other things, whether a creditor relationship exists. For a bond backed by equity interests, the text establishes a rebuttable presumption that the necessary creditor relationship is absent. Analysis of the cash flows and structure can overcome that presumption. Credit enhancement must provide substantive protection against losses. 6

Classification also depends on the issuer and its assets. The rules distinguish obligations relying on the general creditworthiness of an operating entity from securities backed by a pool of assets. Certain types of funds may qualify under the first category. NAIC interpretation guidance explains how structures should be assessed. Calling an instrument a “note” leaves the substantive classification work to be done. 6 7

The next step is the NAIC designation used for prudential treatment. A recognized rating may support filing-exempt treatment, subject to the instrument’s eligibility and applicable exceptions. The manual also provides a specific review of certain private-fund interests reported on Schedule BA, a long-term investment schedule. The Securities Valuation Office (SVO) examines the underlying portfolio, strategy and leverage before assigning a designation. That procedure concerns the fund interest; debt issued by a feeder requires its own assessment. Any comparison must start with the actual treatment of each investment. 8

Method and scope

Accounting classification, designation and the RBC calculation are distinct assessments. The Schedule BA procedure discussed in the article concerns certain private-fund interests. Selected Life/Fraternal Non-CLO/CBO/CDO factors from page 7 of 2026-12-IRE MOD: 1.A 0.158%; 1.G 1.016%; 2.B 1.523%; 2.C 2.168%; 3.B 4.537%. The illustrative product is factor × $100 million of book/adjusted carrying value, before tax, portfolio adjustments and aggregation. Total capital requires the broader formula.

The third assessment concerns risk-based capital (RBC) factors. In the table for life insurers’ 2026 year-end reporting, the bond column excluding CLOs, CBOs and CDOs assigns a base factor of 0.158% to NAIC category 1.A, 1.523% to 2.B and 4.537% to 3.B. These pre-tax factors apply to book/adjusted carrying value, before portfolio adjustments and the aggregation of risks. 9

An illustration shows the scale. Applied to $100 million of book/adjusted carrying value, the three arithmetic products are $158,000, $1.523 million and $4.537 million. These amounts isolate one component of the calculation. The insurer’s total capital requirement comes from a broader formula. The classification and holdings associated with Partners Group’s October vehicle remain unknown in the public documents examined.

Different treatment can reflect a real economic difference: a tranche protected by subordinated investors starts absorbing losses only after its cushion has been exhausted. At the same time, the schedule creates an incentive to structure claims around its categories. Supervision must establish whether the contracts, cash flows and ultimate holders justify the protection recognized.

On 12 August 2026, the NAIC accounting working group also exposed a proposal addressing asset-liability management risk embedded in certain securitisations. It targets structures whose repayment depends on reinvesting cash flows at sufficient future yields. As of 27 October, the public register still lists it as an exposure draft. Its proposed criteria remain separate from existing rules; assessing any consequence for the October feeder would require its contracts. 18

Redemption windows shape cash availability

Another promise concerns how quickly the money is invested. Partners Group highlights fully paid-in interests in evergreen funds, providing immediate portfolio exposure, alongside the capital treatment. These claimed benefits address different needs: putting an investment to work and determining the prudential resources to hold against it. 1

An evergreen fund has no fixed end date. The liquidity offered to its investors depends on its rules. The April 2026 prospectus of the Luxembourg fund named in the January transaction provides quarterly redemptions, with requests due on the last business day of the preceding quarter. Publication of NAV and payment then follow their own timetable. These are the fund’s deadlines; the feeder debt’s maturities require a different contract. 10

The key information document for the I-N EUR share class provides a numerical reference. For the prospectus category called “New Share Classes”, excluding run-off classes, redemptions net of subscriptions are capped at 5% of their combined NAV over three months and 20% over twelve months. The board may lower these caps to 2.5% and 10% for up to two years. The limits apply across the relevant classes on a rolling basis. Because they are net limits, new subscriptions also affect how much cash can leave the fund. The prospectus details their scope and the provisions for deferring requests. 11

These rules give the fund time to manage illiquid assets. Investors bear part of that waiting time. If the feeder must pay on a particular date, its resilience depends on cash available at its own level: distributions received, reserves and resources that can be drawn under its contracts. Fitch’s criteria examine this relationship between assets, liquidity and payment obligations. 4

Rating methods are evolving with the market. In March 2026, KBRA announced that it would place greater weight on cash flows when assessing certain feeder notes investing in direct loans. That announcement describes a methodological change. Rating a particular issue still requires assumptions specific to the transaction. 15

Method and scope

Mechanism schematic based on Fitch, the FSB and the IAIS. Proportional ownership is simplified; terms and share classes determine actual rights. Inflows and outflows depict an analytical liquidity scenario, without dates or amounts attributed to the Partners Group vehicle.

The distinction between value and cash is familiar. Assets can retain considerable value while their receipts arrive after bills fall due. A reserve can bridge that interval. A credit facility may also advance money within its contractual limits, creating a future repayment obligation. Maturity dates and any provisions allowing interest to be deferred further shape the timetable.

Private credit also uses capitalized interest, often called payment in kind, or PIK. It increases the lender’s claim while postponing the cash receipt. The FSB examines this mechanism among the sector’s areas of concern. Its significance depends on the loans involved and the borrowers’ circumstances. This investigation establishes no PIK rate for the October vehicle. 13

The advantage of a patient insurer

Life insurers may have an advantage in holding these assets: long-term liabilities with sufficiently predictable cash outflows. The International Association of Insurance Supervisors identifies potential benefits from private credit through diversification, an illiquidity premium and matching assets to liabilities. Carefully selected loans can fit the long duration of certain insurance contracts. 14

That match depends on amounts, dates and currencies. A bond paying when an insurer needs to meet policyholder obligations serves a different purpose from an asset that must be sold urgently. The capacity to hold an investment allows an insurer to accept limited market liquidity, provided it has other resources for unexpected needs.

The same framework helps examine stress. Companies delay payments; the fund retains more cash; distributions to the feeder decline. At the same time, the insurer might face higher outflows or margin calls on hedges. This is an analytical scenario, whose severity depends on the protections in place. The IAIS specifically examines insurers’ liquidity needs and buffers. 14

The FSB also notes that some funds’ stable financing limits redemption pressure, while emphasizing the need to monitor layers of leverage and financial connections. A useful assessment follows the entire chain: loan quality, fund debt, feeder debt and the insurer’s capacity to meet its own obligations. 13

Measurement is catching up

Public statistics are beginning to capture this complexity. In an analysis published on 23 September 2026, the NAIC’s Capital Markets Bureau estimated US insurers’ private credit exposure at $1.21 trillion at the end of 2025, using its defined scope and after removing identifiable overlap. The measure uses book/adjusted carrying value. Within the total, privately rated bonds accounted for $512 billion and business development companies, or BDCs, and private credit funds for $32 billion. 12

Method and scope

NAIC Table 1, year-end 2025: private placements excluding privately rated bonds 580; privately rated bonds 512; bank loans 44; middle-market CLOs 42; BDCs and private credit funds 32, totalling USD 1,210 billion. Focus subset: 512 + 32 = 544. This is a broad measure of private credit; rated feeders’ own outstanding amount remains to be isolated. Partners Group’s $510 million October 2026 fundraise is a later flow, displayed separately from the 2025 stock.

Those last two categories make up the $544 billion on which the report particularly focuses. They encompass varied instruments. The document indicates that feeders can appear within privately rated bonds, without identifying a comprehensive total for them. The chart therefore shows the limits of observation: available categories describe exposure, while the structures and their holders require more detailed data. 12

This distinction also guards against a common shortcut: adding together loans, interests in the funds holding those loans, and securities issued to buy the fund interests. That would count legally distinct claims tied to the same underlying source of repayment. Consolidation and examination of the underlying assets connect those levels according to the question being asked.

In a note dated 16 October, the Federal Reserve explains how its September 2026 Financial Accounts release introduced sectors and instruments dedicated to private credit. Part of the improvement comes from identifying positions previously included in other categories. Better statistics make financing channels easier to trace. Changes in classification must still be distinguished from growth in the underlying amounts. 16

The documents that matter

Partners Group’s announcement establishes a financing channel and insurers’ appetite for several levels of risk. Assessing the October transaction requires the documents connecting those levels: the issuance contract, rating report, subordination arrangements and distribution rights.

They would first show the size of the initial loss protection and identify who bears those losses. They would then explain how the feeder handles a period of reduced distributions: available reserves, maturities, possible deferrals and financing terms. Each insurer’s holdings and their prudential treatment would complete the analysis. These documents correspond to the mechanisms described above; the transaction’s precise parameters remain to be established.

A rated feeder turns a fund interest into claims with different priorities. The senior investor’s protection depends on who takes losses first and on cash arriving when due. For insurers, the chain continues to their policyholders: asset receipts must support the payments promised under insurance contracts.

Further reading

• The money behind the promise: the eight investigations in the insurance series, collected as an EPUB.
• How private equity turns fund stakes into bonds for insurers.
• The regulatory price of a promise.
• When risks return to the insurer.
• Private credit: risk begins where the data ends.

Sources

Sources checked on 27 October 2026. Each entry gives the document date, the passage used and its limits.

1. [1] Partners Group : Partners Group closes second rated feeder vehicle of 2026 for its private credit evergreen strategy. Release dated 22 October 2026; rechecked on 27 October. Announced $510m raise, security types, $875m total and claimed benefits. Opening bullets and first four paragraphs. Issuer disclosure. Contracts and tranche allocations remain unavailable; announcement and exact closing dates are distinct. Primary document.
2. [2] Barings / Partners Group : Partners Group and Barings Portfolio Finance Announce Financing for $365M Investment in Partners Group’s Evergreen Private Loans Strategy. 2026-01-21 January fund identity, Barings financing, institutional credit enhancement and DBRS. Paragraphs on the fund, Barings loans and credit enhancement. The $365m is the supported investment. January terms are not assigned to October. Primary document.
3. [3] S&P Global : Daily Update ; Inside Direct Lending Feeder Funds. 2026-09-25 Rated note feeder architecture: a master-fund interest and liabilities with different ranks. Private Markets section, “ABS Frontiers” summary. Primary summary read in full. The linked detailed research was unavailable and is not represented as examined. Primary document.
4. [4] Fitch Ratings : Feeder Fund Debt Rating Criteria. 2025-09-24 Public framework for examining the financing chain and feeder obligations. PDF pp. 5–7: cash flows, master-fund leverage, priority and liquidity; pp. 13–14: legal protections. Dated general methodology. No Fitch rating of the Partners Group vehicle is established. Primary document · Official supporting page.
5. [5] U.S. Securities and Exchange Commission / Investor.gov : Updated Investor Bulletin: The ABCs of Credit Ratings. 2017-10-12 Credit-risk scope and distinction from security price and market liquidity. Sections defining credit ratings and their limitations. General educational guidance, not an assessment of this issuance. Primary document.
6. [6] NAIC : SSAP No. 26 ; Bonds. 12 September 2024 version; effective 1 January 2025 Creditor relationship, presumption for equity collateral, substantive protection and issuer classification. Paragraphs 6, 10 and 12; PDF pages 4–5, 8–9 Public version of the adopted text, retaining revision marks; no individual classification of Partners Group notes. Primary document.
7. [7] NAIC : INT 24-01 ; Principles-Based Bond Definition Implementation Questions and Answers. Effective 1 January 2025; last discussion 17 November 2024 Assessment of economic protection and classification based on the structure’s substance. Status on PDF page 1; questions 1 and 3, pages 3–4 Interpretive guidance; the fund-specific distinction is supported by paragraph 12 of SSAP 26. Primary document.
8. [8] NAIC : Purposes and Procedures Manual of the NAIC Investment Analysis Office ; December 2025. December 2025 edition; effective 31 December 2025 Designations and conditional filing exemptions; specific review of private-fund interests reported on Schedule BA. Printed pages 117–125: filing exemptions; 217–222, paragraphs 285–300: private-fund interests, SSAP 48/97 and Schedule BA. The procedure for fund interests is distinct from assessing debt issued by a feeder. A designation leaves the accounting assessment to be completed. Primary document.
9. [9] NAIC : 2026-12-IRE MOD ; adopted LR002 amendments. Adopted 30 June 2026; year-end 2026 reporting Base factors of 0.158%, 1.523% and 4.537% of book/adjusted carrying value. PDF page 1: adoption; page 7: non-CLO/CBO/CDO column, rows 1.A, 2.B, 3.B Life factors before tax and other adjustments; no estimate of PG capital. “2026-12” is an agenda identifier. Primary document · Official supporting page.
10. [10] Partners Group Private Loans S.A., SICAV-SIF : Prospectus for Private Offering. April 2026 version, stamped 22 April. The 30 April filename does not establish publication date. Rules of the fund identified in January; redemption windows and timing. Page 111: definition of “New Share Classes”; pp. 117–119: scope, caps, redemption schedule, NAV and payment. Complete 135-page prospectus collected, relevant sections examined. October fund identity remains unconfirmed. Primary document.
11. [11] Partners Group Private Loans S.A., SICAV-SIF : Key Information Document ; Class I-N EUR, LU1911732953. 2026-07-07 Net redemption caps of 5% / 20% for the contractual “New Share Classes” category, excluding run-off classes; possible reduction to 2.5% / 10% for up to two years. PDF p. 3, holding period and redemption; cross-check with prospectus p. 117. Rules of the identified fund/class; feeder noteholders’ rights follow their separate contracts. Primary document.
12. [12] NAIC Capital Markets Bureau : Private Credit Analysis of the U.S. Insurance Industry. Published 23 September 2026, confirmed by the official index; year-end 2025 data. Estimated year-end 2025 exposure: $1,210bn; categories and $544bn subset. Table 1, PDF page 10: estimate after removing identifiable overlap; pp. 10–11: privately rated bonds and funds. Book/adjusted carrying value, broad NAIC scope. No exhaustive standalone feeder total. Primary document · Official supporting page.
13. [13] Financial Stability Board : Report on Vulnerabilities in Private Credit. 2026-05-06 PIK mechanisms, financing layers, durable capital and liquidity risks. PDF p. 25: PIK; pp. 31–33: insurance, leverage and liquidity. Sector analysis, with no finding about the October feeder portfolio. Primary document · Official supporting page.
14. [14] International Association of Insurance Supervisors : Global Insurance Market Report 2025. December 2025; exact release day not used. Potential insurer benefits and conditions for controlling liquidity risks. PDF pp. 33–35 / printed pp. 29–31: private credit; PDF p. 19 / printed p. 15: liquidity. International framework and aggregate observations, not validation of PG notes. Primary document.
15. [15] KBRA : KBRA Releases Updates to Its Investment Fund Debt Global Rating Methodology. 2026-03-12 Methodology change for certain direct-lending feeder notes. Paragraphs on the additional example and cash-flow weighting. Full release examined; login-protected complete methodology not obtained. No attribution to PG. Primary document.
16. [16] Federal Reserve ; FEDS Notes : Introducing Private Credit into the Financial Accounts of the United States. 16 October 2026 note about the September 2026 statistical release. New categories in the September 2026 release; improved statistical identification. Introduction and explanation of sector/instrument changes. Authors’ research note, distinct from a Board decision. Scope differs from NAIC’s. Primary document.
17. [17] NAIC : Insurance Topics ; Statutory Accounting Principles. Updated 23 June 2026 Relationship between NAIC accounting guidance and state insurance regulation. Background: national framework, prescribed and permitted practices General explanation; documents no decision on a particular insurer or issuance. Primary document.
18. [18] NAIC, Statutory Accounting Principles (E) Working Group : SSAP No. 26: Embedded ALM Risk (Ref. 2026-10). Proposal exposed on 12 August 2026; still listed among outstanding exposure drafts as of 27 October 2026. Proposed criteria addressing reinvestment and asset-liability management risks embedded in certain securitisations; distinction between an exposure draft and existing rules. DOCX, Description of Issue, Proposed Revisions to SSAP No. 26 paragraphs 8–9, and Status; official register, Exposure Drafts Outstanding, item 2026-10 (updated 8 October 2026). Proposal with a comment deadline of 2 October 2026, distinct from an adopted rule. The public register still lists it as an outstanding exposure draft on the verification date. No finding about the October Partners Group notes or their contracts. Primary document · Official supporting page · Official supporting page.