Insurers’ exposure to private credit market raises questions
INSURANCE companies’ increasing exposure to private credit is raising some concerns, with regulators saying they’re keeping an eye on the development.
In July, Professor Ludovic Phalippou from Saïd Business School, University of Oxford spoke about the risks of insurance companies piling into private credit at a Financial Services Regulation Committee hearing.
“They are allowed to leverage 10 times $1 (£0.74) invested in a private credit fund, which is a fairly risky type of investment to begin with, and allowing insurance companies to have such a high leverage on something already levered is quite a wild move,” he said.
He noted that they are sitting on top of many layers of leverage that could impact their ability to pay out, if
there were a natural disaster in the UK.
“People would go to the insurance companies, which would not be able service the claims because they had piled up these private credit funds, the valuations were wrong, they would not be able to withdraw, the liquidity was not what they
anticipated, they had all these layers of debt, et cetera,” he said. “The UK government would then have to step in.”
Alternative Credit Investor reached out to regulators around Europe to find out whether they are concerned about the risks of insurers investing into private credit.
Only the Swiss
Financial Market Supervisory Authority (Finma) and the Italian Institute for the Supervision of Insurance (IVASS) responded.
Finma said: “Private credit represents less than one per cent of the investments of Swiss insurance companies, though we are currently observing a sort of >> 4
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Last month, we revealed the exciting news that we are expanding our awards series into the US next year.
The Alternative Credit Awards, hosted by Alternative Credit Investor, recognise the most influential fund managers and service providers shaping the alternative credit space.
A substantial portion of our readership is based in the US, so due to industry demand, we are expanding the awards into North America and Europe editions in 2026, with the ceremonies taking place in New York City and London respectively.
The Alternative Credit Awards North America 2026 are now open for entries, with the winners set to be announced at a glittering ceremony at 583 Park Avenue, NYC on 14 April 2026.
We encourage all industry stakeholders who operate in North America to apply now, ahead of the 28 November 2025 deadline.
Good luck!
SUZIE NEUWIRTH EDITOR-IN-CHIEF
cont. from page 1
growing appetite. This is a topic on which we are currently placing a focus.
“According to existing regulations, insurers may only invest in assets and instruments whose risks they can adequately assess, evaluate, monitor, control and include in their reporting. Compliance with these requirements is something we are monitoring closely in companies with an increased appetite.”
Meanwhile, IVASS noted: “Italy's exposure to alternative investments remains limited. However, appetite is growing in several European countries, which is why we are monitoring the situation closely.”
According to Will KeenTomlinson, vice president, senior analyst at Moody’s Ratings, there is a level
of unpredictability introduced into the asset portfolio due to matching adjustments being extended to assets that are sub-investment grade following Solvency II reform.
He added that they would generally expect the portfolios to remain heavily geared towards investment grade. He also noted that with annuity portfolios, the payments are fixed and there is
no catastrophe liquidity outflow scenario. “So the risk of being a forced seller is basically nil.”
He believes that the risk is in credit migration and risk of defaults.
“In this scenario, we’re really putting reliance on either the insurers’ internal ability to rate and value these assets or potentially the work of their asset manager,” he added. “So this is where we say opacity is
PIC eyes infrastructure and fund finance opportunities
THE PENSION Insurance Corporation (PIC) is eyeing opportunities within infrastructure and fund finance, its head of structured credit has revealed.
The PIC insures the liabilities of UK defined benefit pension schemes.
Its main focus is liability matching, which involves finding assets to pay out those liabilities.
It has invested in over £14bn of private assets.
Marno Jooste told Alternative Credit Investor that he is seeing good opportunities within in
infrastructure, “both in terms of attractive prices and long duration”.
PIC recently invested £300m in the Haweswater Aqueduct Resilience programme, which Jooste said was “a long date, inflation-linked asset which matches our
a risk in the industry.”
He added that the risk of becoming a forced seller is potentially greater in Europe than in the UK, which is why the holdings tend to be lower.
“Most European life insurance business is savings business that has some elements of lapse risk,” he said.
“So typically we see insurers holding a buffer of liquid assets to cover that risk.”
liabilities well”.
Jooste also highlighted opportunities in the fund finance space.
“While we’re trying to find long duration assets, we still need shorter-dated cashflows,” he said.
“Therefore, we're looking for the highest yielding opportunities and the fund finance space has provided quite a few over the last two years.”
Read the full interview with Jooste on page 18.
Tikehau eyes bank partnerships and wealth channel for growth
TIKEHAU Capital is in discussions with a number of banks to set up “mutually beneficial” partnerships on products.
The French asset manager, which has €51bn (£44bn) in assets under management, 46 per cent of which is in credit, has a long history of partnerships with other asset managers, insurance companies and banks.
Most recently, the group set up a strategic alliance with Nikko Asset Management to expand into Asian private markets; partnered with stockbroker UOB-Kay Hian to launch a credit strategy; and launched a defence-focused fund with Société Générale Assurances, CNP Assurances and CARAC Group.
Back in 2014, the firm had signed a partnership with Amundi, with the former taking a stake in the latter and cooperating on private debt management.
“The firm has been built with partnerships. We like partnerships,” Maxime Laurent-Bellue, deputy chief executive and co-head of credit, told Alternative Credit Investor
“We've done partnerships with all sorts of players over the past 20 years. With families, with banks, with asset managers. So, this is something we're always open to. We have some live discussions with banks, for instance.
“This is an area that we are very much focused on. And this can take many different forms. It can be very much local... or it can be global on a product. It has to be mutually beneficial. I think it's really the opportunity that will drive the decision to move forward. But we are constantly having discussions."
Tikehau’s private credit arm, with €23.4bn in assets under management, invests across direct lending, secondaries, collateralised loan obligations (CLOs), special
opportunities and real estate debt. Although it is a wide platform, expansion and growth are still very much front of mind.
Laurent-Bellue said the group has a few strategic projects in the pipeline, which could include new adjacencies or complementary products within its existing core strategies. While he would not elaborate on any further details, he noted that on the CLO side they are actively working to launch a captive equity fund in the fourth quarter of the year.
He also said that although they are currently investing in digital infrastructure through the real estate strategy, “one day the question will be whether we should dedicate a strategy as well”.
“We are Europeanrooted but we want to
continue to expand,” he added. “For sure, Europe will remain and is still our core playground. Especially in the current environment, where there is a lot of interest in Europe for good reasons. This is just a reflection of how the business has grown recently. We're now operating with 17 offices globally. So, naturally, we raise and deploy more capital globally."
The group is also innovating when it comes to tapping the private wealth channel, which Laurent-Bellue said is a key focus. Private capital currently makes up around 30 per cent of Tikehau’s assets under management. Most recently, Tikehau rolled out a private creditfocused European longterm investment fund.
“We've been successfully launching some unitlinked strategies partnering with insurance companies in private credit and more recently private equity,” he said. “In addition, we recently launched an evergreen semi-liquid private credit product which is growing fast and we intend to scale it over the coming months.”
Alternative Credit Awards 2025
The Alternative Credit Awards will take place on 19 November 2025, at the Royal Lancaster London.
The event – hosted by Alternative Credit Investor – is the only dedicated alternative credit awards ceremony in the UK and has quickly become a must-attend industry event.
Go to our website at alternativecreditawards.com for more information.
For table enquiries, please email sales and marketing manager Tehmeena Khan at tehmeena@alternativecreditinvestor.com.
For sponsorship enquiries, please email commercial director Luke Raphael at luke@alternativecreditinvestor.com.
Smaller firms find gap in competitive market
THE HIGHLY
competitive private credit market is dominated by the largest players, but it is still possible for smaller entrants to gain a foothold by identifying a niche, demonstrating agility and deploying technology, according to stakeholders.
PitchBook data released earlier this year revealed that the share of fundraising by emerging managers, defined as those with three or fewer funds, fell to just six per cent in 2024. This compares to 10.1 per cent in 2023 and 7.6 per cent in 2022.
But new entrants to the market argue that there is still scope to grow if you have the right proposition.
John Kim is chief executive of Reckoner Capital, a credit asset manager specialising in structured credit and private credit that was founded in October 2024.
“Whenever you have an asset class – and it doesn’t have to be credit – you have some players that will get extraordinarily large in that space,” he said. “The problem they run into, often, is it takes a larger individual deal to move the needle, and that leaves space for smaller firms to come in and do the deals that the larger firms can no longer do.”
Meanwhile, Kirsten
Hagen, partner at Brinley Partners, said the firm was founded after spying a gap “for a focused, specialised player” and provides capital solutions to sponsor-backed companies in the middle market, upper middle market and large cap space.
Founded in 2021, it now has $9.8bn (£7.2bn) of assets under management.
Hagen believes that there are advantages to being a “player of scale, but not a mega manager”.
“We’re able to be very nimble, and react to the market,” she said.
“We’re not trying to be everything to everybody. Our approach is to focus on the people we know, and on patient and selective deployment.”
For Zack Simkins, managing director at Miami-based Vaster, which specialises in commercial lending on residential assets, local market expertise sets
smaller firms apart from their larger peers.
“You see more local players really dominating their markets because it’s relationship-based, and they understand the asset classes a bit more intricately than a larger institution, and you can get more creative,” he noted.
Not all firms are in competition – many large and small players are partnering in the private credit space.
Mike Damaso, co-chief executive of Canal Road Group, established in 2023, said partnering with Canadian bank BMO, which is also an owner in the firm, has given it access to “interesting deal flow”.
“I think you’re seeing a lot more of that,” he added. “A lot of peers are striking relationships with banks or other players in the market. It helps us differentiate in terms of the deal flow that we see.”
According to Nicolas
Kipp, founder and chief executive of Credibur, an infrastructure platform for private credit facility management, smaller private credit firms are “more entrepreneurial”.
“I think that’s the main advantage, being more nimble and agile,” he said. “And sometimes taking that extra step to find an untapped market.”
Kipp points to the “outof-the-box solutions” that small firms can leverage to run their operations more efficiently.
“When it comes to fundraising and reporting, technology allows you to do that in a much more streamlined way... And that means you can start smaller,” he added.
Brinley’s Hagen said that the firm embeds technology into its operations because “we believe it will help us to build a very scalable platform – to be efficient and nimble”.
UK peer-to-peer lending has grown significantly and proved itself during a turn in the cycle, but what does it need to do to expand further into the mainstream?
By Gurmit Raina, chief financial officer, Kuflink
THE UK PEER-TO-PEER
lending industry has grown significantly since it first emerged as a real contender, stepping in as banks pulled back their lending capital. A vacuum was created and the industry flourished in front of us, showing people there were new ways to access the finance they needed, as well as greater opportunities to invest. Data released last year found that the UK P2P lending market’s total revenue hit a new high of £398m in 2024, quite something given this was £20.2m in 2013!
However, P2P is still viewed as an alternative and to some extent it always will be. Some critics say the P2P has yet to break through into the (financial) mainstream. I disagree with that, but I do think more can be done to build on the already incredible success the P2P lending sector has achieved in the UK and to broaden this out to a wider range of investors and borrowers alike.
Giving the people what they want
Like anything, for P2P to resonate with a larger audience it needs to meet their needs and wants. That requires a broader range of products
P2P lending’s next era
but this can be a challenge given the regulatory restraints put upon us. All the checks and balances in place may be off-putting for new customers but ultimately, these are for their protection. If you want to protect your consumers, you need to operate in the regulated market. However, there are other levers in our control and technology is a prime example. This has already been a big driver of platform growth and this is something we can look at, such as exploring how we can use extra data points beyond credit scores to support decisions better. One thing we’re not looking at, but others are, is the use of blockchain technology. This has started to play a role with some loans even tokenised and run on smart contracts, which makes everything even more transparent and efficient. Technology can also help us improve things from a customer
experience perspective. People expect quick, seamless customer service and financial services is no exception. Therefore, we can continually explore ways to minimise friction for new customers. At Kuflink a big focus for us is identifying ways we can make everything much more efficient.
A clear proposition
The clearest and simplest propositions are often the most successful. Within financial services, and faced with a huge amount of choice, consumers like to be able to easily compare and contrast different options. This is one of the reasons online comparison sites have become so popular, with people able to bring up options very quickly for them (home insurance, motor finance etc) which lay out all the information they need to then proceed with a purchase.
Unfortunately, P2P lending is not as simple to access. The fragmented nature of our industry means it’s challenging to gain an overall view of all the platforms, comparing and contrasting what these offer. Again, regulatory constraints can be difficult to work with here and P2P platforms have to abide by a multitude of rules concerning how they operate and communicate with customers. However, there is no guidance about how P2P should be explained to customers or the kind of language that should be used. Even a simple comparison table – unbiased and from a reputable source – would be very helpful in educating new consumers. Anyone interested in P2P would very quickly get the lay of the land, understand how different platforms operate and then likely be more willing to proceed. That’s a major piece of the puzzle missing for P2P.
Newcomers need to have trust in platforms, and clearer communication – including full transparency on risk and performance – is crucial to this. The industry needs to show consistency. Mainstream investors want to see steady returns and platforms that are robust enough to handle changes in the economy, not just when times are good. That also means improving credit checks and having strong systems in place for dealing with defaults. It needs to integrate better with the wider financial world. If P2P platforms are more closely linked with banks, investment platforms or pension products, it becomes easier for people to see it as part of their normal investment mix. So, in short stronger trust, proven stability, and closer integration with the rest of finance is what will help P2P fully step into the mainstream.
It’s also important to recognise that there is only so much in the P2P industry’s control. Many people are put off from investing or engaging with wider financial services because they have a lack of understanding about how it works. People see “high risk” investment warnings and they can quickly run a mile. To that end, P2P also suffers from the wider public’s lack of financial knowledge.
An exciting time
I haven’t written this piece to be a naysayer of P2P. I’ve spent my career in finance and though I’m relatively new to the P2P world, having joined Kuflink earlier this year, it’s already very clear to me that exciting things are happening in this space.
The space has grown and matured, with platforms becoming increasingly sophisticated and continually reaching a broader range of customers which is evident in the statistics around how the sector is growing. The innovative finance ISA was arguably a real watershed moment for P2P, benefitting from the household name recognition of the ISA wrapper. There are a lot of positives there and anyone working in P2P knows this, but this is an important time to push on. The sector has recorded great growth in recent years but there is still a huge amount of opportunity out there. I would really like to see a company emerge that can provide a comprehensive competitive dataset for the P2P market, as this would go a long way in strengthening investor confidence. I’m excited to see what the industry does next and where P2P goes from here.
This article is promoted content, created in partnership with Kuflink.
Winning over the wealth market
Private credit firms are targeting the wealth market, with the most progress being made in the US. But are there still lessons to be learned?
Jon Yarker reports.
THE PRIVATE CREDIT industry has been making a big push into the wealth space in recent years, to diversify its sources of funding and meet its growth ambitions, while democratising access to the asset class.
The US is not only the world’s largest private credit market but is also the most advanced when it comes to making inroads into the wealth space. Figures from investment bank RA Stanger show private credit funds attracted $48bn (£35.4bn) from wealthy US investors in the first half of 2025 – more than over the entirety of 2023. The use of the Business Development Company (BDC) structure adds more transparency to the sector for individuals, and US President Trump’s recent move to include alternative assets, such as private credit, in 401(k) retirement plans is set to boost the market further. While private credit firms in other parts of the world can look to the US, engaging with a new investor base poses several important considerations.
What is wealth?
A starting point for any firm is the definition of ‘wealth’ and what
this investor looks like. Rather unhelpfully, this is a nebulous term open to interpretation.
Jonathan Bray, private funds partner at Clifford Chance, explains there is a “whole spectrum” of wealth channels.
“This includes everything from high-net-worth private bank channels that have been investing in credit funds for decades, to newer semi-professional or mass-affluent products offering very small ticket sizes,” explains Bray. “We spend a lot of time helping clients understand these options – and what that means for their business."
The variety of wealth clients is an important consideration for private credit firms – just because two clients are both defined as wealthy does not mean they will have the same investment needs or capabilities.
According to Dipan Roy, head of portfolio construction at Redington, this can be broken down into mass market, mass affluent, high net worth and ultra-high net worth. Identifying which of these being targeted is an important consideration for private credit firms.
“Within this market, there can
be a wide variety of products with different investment objectives like capital growth, income generation, capital preservation; along with a large range of risk appetites from very cautious to very adventurous,” says Roy. “Given the diverse, fragmented nature of the wealth market, choosing the right product, with an appropriate pricing strategy and suitable distribution channels becomes essential.”
The plan of attack
Once a private credit firm has
identified the part of the wealth market it wants to expand into, considerations then turn to tactics. Brendan McCurdy, managing director and head of marketing and research at Ares Wealth Management Solutions, explains that this comes down to two critical areas: product design and distribution.
“In terms of product design, structures should balance access with practicality, including seeking private market returns along with some level of liquidity, transparent
“ Structures should balance access with practicality”
reporting and tax efficiency,” says McCurdy. “With respect to distribution, wealth intermediaries and their advisers and platforms play a pivotal role in providing access to investors, and successful access requires robust educational resources, streamlined onboarding
and technology that integrates seamlessly into their workflows.”
However, targeting wealth investors goes beyond product development and distribution. The fundamentally different makeups of these end-clients mean the underlying investments within private credit funds have to be assessed as well. Neil Blundell, chief investment officer at CAIS Advisors, says the real focus for these investments is ensuring the durability of these underlying portfolios.
“That starts with focusing on first-lien, senior secured, sponsorbacked loans diversified across industries, and maintaining covenant discipline so managers have the ability to step in early if performance deteriorates,” says Blundell. “It also means underwriting to withstand higher base rates and slower growth and aligning liquidity terms with the true liquidity of the assets.”
BDCs
BDCs have played a significant role is helping US private credit firms access the wealth market. SLR Capital Partners co-founder Michael Gross is also co-chief executive of the SLR Investment Corp, the firm’s BDC, and points to wealthy investors as “ideally suited” to benefit from these structures.
He manages the SLR Investment Corp alongside his co-founder Bruce Spohler, and explains:
“Today, we manage our public BDC, SLR Investment Corp and three private BDCs, and we’re developing a new evergreen BDC for launch in 2026.
“While the public BDC is the most visible and longest-standing structure enabling private wealth investors to access private credit,
the recent growth of BDCs, at a five-year compound annual growth rate of 33 per cent to more than $500bn, has been driven by the creation and distribution of the semi-liquid, evergreen BDC which offers investors quarterly liquidity of up to five per cent of net asset value (NAV).”
BDCs have been in existence since 1980, but have become a popular strategy for private credit firms in recent years. Their ability to package historically institutional, illiquid asset classes and become accessible on advisory
“ The recent growth of BDCs…has been driven by the semiliquid, evergreen BDC”
Conquering the UK wealth market
Private credit firms’ efforts are being noticed in the UK’s wealth market but work is still required. With £57bn in AUM, RBC Brewin Dolphin is one of the UK’s largest wealth firms and head of global manager research (Europe) Shakhista Mukhamedova says private credit remains an area where they maintain exposure despite being underweight on alternatives.
“We’ve built a good relationship with a number of private credit firms over the last five years but have made no meaningful allocation to new relationships yet,” says Mukhamedova. “We are aware of the difficult macro environment for private markets – therefore, we are taking a highly selective approach, looking for high quality managers with long-term consistent track records and prefer strategies with asset backing and/or contracted cashflows.”
Wealth Club is the UK’s largest non-advisory investment service, overseeing £1.5bn in wealth
investment since its 2016 launch, and investment manager Nicholas Hyett says limited fund choice makes it “extremely challenging” to invest in the asset class.
“As private credit markets have attracted more capital, the gap between private credit yields and public credit yields has narrowed,” adds Hyett.
“That makes private credit comparatively less appealing to income seeking investors – in part because higher quality private credits are still viewed as riskier than publicly traded higher yield.”
Additionally, liquidity remains a key concern for both. This has pushed Mukhamedova towards semi-liquid structures like Hyett, who warns about investors’ levels of private credit knowledge.
“Unlike mainstream credit, investors can’t sell out of semi-liquid assets quickly,” says Hyett. “Finding you can’t withdraw your money when you need to is a nasty surprise, and avoiding that needs the industry to invest in substantial education efforts.”
platforms has helped them become “important gateways” for wealth expansion, according to Blundell.
“BDCs largely have exposure to first lien, floating-rate direct lending – a part of the market that has
consistently offered about a four per cent yield premium over broadly syndicated loans since 2015, with low correlation to core bonds,” he explains. “The less frequent NAV marking has also helped smooth volatility. All of this has made BDCs an effective bridge, helping private credit move from an institutional tool to a mainstream component of income portfolios in wealth.”
The 401(k) future
Looking ahead, the consensus among experts is that this trend will increase, helped in part by President Trump’s recent executive order mandating the Department of Labor to review the inclusion of alternatives in 401(k)s.
“My Administration will relieve the regulatory burdens and litigation risk that impede American workers’ retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement,” the order said.
Firms such as BlackRock are already preparing to launch their own retirement funds that will include private credit investments.
According to SLR’s Gross, this
increased retail attention will help the market near critical mass.
“The increase in capital supply for private loans will put downward pressure on terms and returns for investors in cashflow lending, where there are lower barriers to entry, for retail and institutional investors alike,” adds Gross.
Some stakeholders have highlighted what the US market in particular has achieved. McCurdy points to the success of the country’s regulatory clarity and structures like BDCs providing a “scalable pathway” for wealth market expansion, with the latter “helping legitimise” private credit. His peers feel the same, and Blundell claims the US private credit market offers a “useful playbook” for other regions.
This optimism isn’t universal, however. Roy highlights two main challenges – the higher fees of private credit making it harder to demonstrate value for money, while the larger ticket sizes required for some investments could price out many wealth clients.
“It’s possibly too soon to learn any lessons from the US private credit industry’s foray into its wealth market,” adds Roy. “We haven’t had a prolonged downturn in private credit for a while, and only in such downturns is it possible to find out if things should have been done differently.”
Private credit is undoubtedly growing its presence in the wealth market, with popularity of BDCs having clear success in winning over new investors, especially for some of the largest firms. However the operational complexities of private credit, and vast spectrum of wealth clients, could provide barriers the wider industry will have to tackle.
Navigating structural shifts in private credit: Lessons from a fragmented Europe
Zach Lewy, chief executive and chief investment officer at Arrow Global, explains how structural shifts and market fragmentation are creating opportunities for investors willing to look deeper into European private credit and real estate.
AS INSTITUTIONAL
investors evaluate where we stand in the current credit cycle, one thing is clear: the dynamics of private credit and real estate in Europe are no longer shaped solely by interest rates or GDP growth. Structural shifts are redefining how and where capital is deployed. The retrenchment of traditional banks, geopolitical realignments, rising construction costs, and evolving borrower behaviours are combining to create a far more complex opportunity set than in previous cycles.
At Arrow, we do not view dislocation as a temporary disruption. Instead, we consider it a durable feature of today's market. Our strategy is built on deep local knowledge, a panEuropean presence, and a focus on assets that require active resolution. This consistent approach allows us to deliver results across geographies and market cycles.
The past five years have highlighted how quickly operating environments can change. Loans originated before the pandemic, before inflationary shocks, and before the widespread shift to remote work now sit in fundamentally altered contexts. These assets often require more than refinancing. They demand new business plans and
new capital structures that reflect today’s realities. Construction costs have increased dramatically, office usage patterns have evolved, and asset obsolescence has accelerated. Assets and projects that could readily attract bank financing five years ago may now fail to secure financing or deliver sustainable returns unless restructured to reflect today’s operating environment.
Banks are constrained in addressing these legacy exposures. Regulatory capital requirements, shifting risk appetites, and limited operational capacity restrict their ability to act. In many cases, banks are holding loans that belong to a previous economic era, both in terms of underwriting assumptions and asset use cases. This is where private credit providers like Arrow step in. Over the last 12 months, we have deployed more than €3.1bn (£2.7bn) across our strategies to facilitate balance sheet repair and borrower support.
Fragmentation
and local opportunity What distinguishes Europe from more integrated credit markets is the persistence of fragmentation. Despite decades of EU harmonisation efforts, the reality is that the majority of transactions remain domestic. Germans lend to
Germans, Italians to Italians, and French to French. In some sectors, as much as 95 per cent of overall activity remains local. Cross-border penetration is still low in many industries, despite the introduction of a common currency and policy efforts to unify capital markets.
Understanding this fragmentation is essential. The opportunity is not simply where distress is most visible, but where resolution can be executed most effectively. Timing also matters. If a dislocation resolves in a matter of weeks, the investment window is narrow, and returns may be modest. The assets we target are typically more opaque, slower to resolve, and therefore more attractively priced. We identify these inefficient markets and apply our local operational capabilities to unlock value.
This approach contrasts with strategies that chase volatility spikes. While there is often shortterm trading potential when assets are marked down suddenly, those strategies carry timing risk and tend to produce modest returns. Our investment thesis is built on sourcing assets off-market, underwriting them with deep local knowledge, and executing resolutions that create sustainable value. This all-weather model has delivered tangible results. Over the past four years, our funds have generated
an average cash run rate of 29 per cent annually, a reflection of our ability to identify assets that can be resolved quickly and profitably.
We find the greatest returns in smaller, locally sourced deals that require regulatory permissions and on-the-ground servicing. These are often overlooked by larger institutions but offer superior unlevered margins of safety. We invest in them because we know them well. We understand the borrowers, the assets, the laws, and the timelines required for resolution. Our servicing infrastructure enables us to work directly with borrowers to implement turnaround plans. This operational advantage is further reinforced by our position as incumbent servicer in many markets, with borrowers already paying into our systems. Today, Arrow manages €112bn of assets under management across Europe,
giving us the scale and data depth to identify and resolve opportunities that others may overlook.
This localisation of opportunity extends across asset types. Whether in Southern European hospitality or Northern European residential markets, we prioritise fundamental characteristics, cash-flow resilience, and shifting patterns of use. The post-pandemic environment has prompted a reassessment of office demand: in some jurisdictions vacancy rates have risen sharply, while in others demand has migrated toward residential and hospitality, opening new avenues for investment. In housing markets, construction cost inflation and reduced lending capacity have created opportunities for private capital to provide flexible financing solutions.
Recent data from our servicing platforms indicates that Southern European assets have performed
comparatively better since 2022. This challenges long-standing assumptions about regional credit quality and suggests that historical risk premiums may no longer be justified. Southern Europe, long associated with fiscal headwinds, is now benefitting from tailwinds such as reduced operating and construction costs, better weather, and increasing international demand for property and hospitality assets. Our strategy is to back assets that are temporarily impaired, not structurally obsolete. This demands both strategic perspective and detailed local execution. We combine the ability to assess market dynamics at scale with on-theground underwriting, servicing and operational expertise. It also requires patience. We are not chasing volatility but building portfolios that can endure across cycles. With a presence in eight countries, management of more than 35 million assets, and a team of over 4,500 professionals, we are structured to convert complexity into opportunity.
As the European credit cycle evolves, institutional investors would do well to look beyond headline macro indicators. The structure, liquidity, and solvability of underlying exposures carry greater weight than market averages. Resolution is not passive. It is active, operational, and inherently local.
In part two, to be published in the November edition of Alternative Credit Investor, I will explore why traditional metrics such as default rates may be insufficient indicators in Europe and why time to resolution is a more critical measure for investors seeking to understand opportunity in European private credit and real estate.
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In conversation with PIC’s Marno Jooste
Marno Jooste, head of structured credit at Pension Insurance Corporation (PIC), outlines how he and PIC’s private debt origination team tackle private credit opportunities.
Alternative Credit Investor (ACI): What does PIC do?
Marno Jooste (MJ): We insure one type of risk – liabilities of UK defined benefit (DB) pension schemes. Corporates looking to derisk their balance sheets will come to PIC, and we will either buy in and insure a portion of that liability scheme or execute a buyout, which takes on their assets and liabilities and we become responsible for running the scheme. They pay an insurance premium for that, and it becomes our responsibility to meet those pension payments. Our main focus is liability matching
those pension liabilities. This limits our investable universe.
ACI: How big a role does private credit play here?
MJ: PIC has roughly £50bn of assets on its balance sheet. The portfolio is made up of cash and gilts, a large portfolio of public credit and we have invested in over £14bn of private assets. That allocation between public and private assets is very dynamic and changes based on where we can find the best relative value. I joined PIC in 2017. Back then, private assets were providing a significant premium over public assets. As
“ [Our] allocation between public and private assets is very dynamic and changes based on where we can find the best relative value”
which involves us finding assets to pay out those liabilities –often for decades to come.
We’re governed by Solvency UK and the PRA, which require us to meet strictly defined asset eligibility criteria. Fundamentally, we must make sure we can match
other investors became more sophisticated and entered these markets, that premia decreased.
Our peers have similar liability profiles, but we're all taking on different pension schemes, so everyone operates slightly differently within their own
regulatory models. With assets, we are essentially looking for investment grade, long duration cashflows. That naturally leads us to regulated sectors such as infrastructure, utilities, social housing, student accommodation and related sectors.
ACI: Where are you seeing good opportunities right now?
MJ: One area that continues to provide attractive opportunities is infrastructure. Although the number is fewer, we see some really attractive investment opportunities, both in terms of attractive prices
and long duration. For instance, we just invested £300m in the Haweswater Aqueduct Resilience programme which was a long date, inflation-linked asset which matches our liabilities well.
Elsewhere, the fund finance space is an interesting one where we've made significant progress. While we’re trying to find long duration assets, we still need shorter-dated cashflows. Therefore, we're looking for the highest yielding opportunities and the fund finance space has provided quite a few over the last two years. Real estate is another interesting area where we have invested in a wide range of projects in the UK.
We think those long duration, inflation-linked opportunities are
“ The fund finance space is an interesting one”
very good assets for PIC. However, the opportunity set is quite small, especially with the volatility over the last year discouraging borrowers from the market. That means we have started venturing into new markets, such as Southern and Eastern Europe and South America.
ACI: How challenging is it to access those new markets?
MJ: It makes sense to focus closer to home initially. However, as the team and expertise have grown, we have expanded our asset origination capabilities and, to be frank, while we are determined to invest more in the UK, there are just not enough investment opportunities here to match the massive amounts of liabilities coming through the
pension risk transfer market.
That means we have to look at new markets to find assets to match those pension liabilities. The natural step is to our neighbours in Europe, looking at things like infrastructure, fund finance, corporates and real estate. The US is the largest market so there will naturally be more opportunities there too.
Having the resources to access new markets is a really big consideration for us. How much time and effort do we need to spend on a new market or sector? Additionally, is there enough supply available for us, such that we could reap the benefits over the next 10 to 15 years? As a large organisation we're investing actively every year. We're not going to go in for one-off deals.
ACI: Private credit has grown rapidly in recent years – what are your views on this?
MJ: When I joined, there were five in our private asset origination team and we're now at 12. That tells you how the space has grown over the last couple of years as markets have developed and borrowers have realised there is a big demand for quality assets from investors like insurance companies. That was fuelled even more when we had the sharp increase in rates, when more DB pension funds became fully funded and looked to de-risk.
It’s a very innovative space to work in, one of the few highgrowth areas within the financial sector. The downside is increased regulatory scrutiny, and perhaps a slightly slower deployment of the assets you want to invest in. Given how closely regulated our industry is, growth has been quick but the controls in place have allowed for a safe trajectory.
ACI: As an investor, what risks are you keeping an eye on right now?
MJ: The obvious issue is the uncertainty in the market. The tariffs that the USA has implemented have really shaken up the global political system which means a lot of the borrowers don’t want to come to the markets. US
“ Some borrowers are now getting away with lighter covenants”
credit spreads are at or near all-time tights, the UK market is similarly at historical tights. We've got massive spread compression despite a very volatile political and macro picture, which doesn't stack up. In a volatile market environment, you would think risk premia and spreads should rise, but we've not really seen much of that. Investors still find the current yields attractive. On top of that, there's a lot of money sitting on the sidelines. Basically, every private equity or private credit fund has raised billions of capital but not deployed it, creating massive demand for assets but without enough supply. That can lead some investors to overpay for assets and to compromise their credit discipline. Some borrowers are now getting away with lighter covenants on their documents and some investors are willing to give those up just to deploy capital. That's where you need to find a good balance of pricing assets correctly while also ensuring you maintain your credit underwriting standards.
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