Insurers Shift to Private Credit; ETF Offers Hedged Access

Marsh’s 2026 Global Insurance Investments Survey found 57% of insurers plan to increase private credit allocations over the next 12 to 24 months, up from 32% a year earlier. The increase is strongest among large North American firms seeking higher yields than public fixed income.

Survey respondents identified several risks tied to larger private credit commitments: about two-thirds cited concern over tighter spreads and a shrinking illiquidity premium, 51% cited the risk of rising defaults, and 30% said they had sufficient internal expertise to invest directly in private credit.

Those capability and risk-management gaps have increased demand for vehicles that provide outsourced selection and ongoing oversight.

The Simplify VettaFi Private Credit Strategy ETF (PCR) invests mainly in publicly traded business development companies (BDCs) and closed-end funds (CEFs) that hold private credit assets. BDCs and CEFs trade on public markets and allow investors to gain exposure without direct bilateral lending or multi-year lockups.

PCR’s asset selection is driven by the managers of the underlying BDCs and CEFs rather than solely by the ETF sponsor.

The ETF uses an actively managed hedging overlay that employs total return swaps tied to equity baskets described as higher-quality and junk. The strategy uses performance of lower-rated equities as an indicator of credit stress; the swaps are intended to provide downside protection if equity and credit markets deteriorate and spreads widen.

Because PCR is listed on an exchange, shares can be traded throughout the day. Direct private credit investments commonly have limited secondary markets and multi-year commitments.

VettaFi LLC is the index provider for PCR and receives an index licensing fee. VettaFi is not the issuer, sponsor, or seller of the ETF and has no obligation or liability for PCR’s issuance, administration, marketing, or trading.

Marsh’s survey results show a rise in planned private credit allocations among insurers over the next one to two years and identify specific appetite and risk concerns among respondents.