Fitch Ratings: Private credit exposure of Asia-Pacific insurance companies is expected to be manageable.

Fitch Ratings stated in a report that, due to the limited allocations in the investment portfolios of insurance companies, the exposure to private credit of major insurance companies in the Asia Pacific region is expected to be manageable. Fitch indicated that although insurance companies have increased their allocation to this asset class in recent years to improve yield and portfolio diversification, the allocation to this asset class is typically below 5% of total assets of insurance companies by 2025. Fitch stated that even as private credit becomes more mature in the investment strategies of Asia Pacific insurance companies, there have been no significant changes in the risk profile of their portfolios. The rating agency added that insurance companies should be able to manage private credit risk through measures such as diversification across regions and conservative industry selection. Fitch also noted that monitoring valuation, defaults, and other areas is still important due to the illiquidity and low transparency of private credit.