The insurance sector is increasingly investing in the largest private credit managers through a financial instrument called rated feeders. These feeders bundle investments in private debt funds into bond structures, which helps reduce the capital requirements for insurers when they purchase these assets.

This innovative approach allows insurance companies to have a deeper involvement in private credit markets while still complying with regulatory frameworks that aim to manage risk. As a result, a significant amount of money is being invested in these private credit funds, raising concerns about the impact on industry safeguards and the overall stability of the financial system.