S&P: Insurance companies can withstand a private credit market collapse

The company stated that life insurance companies possess “resilience” and are fully prepared to withstand stress in the private credit sector, which has been under pressure in recent months. The rating agency conducted a series of stress tests and concluded that even in the worst-case scenario considered in the study, only two insurance companies would possibly face a ratings downgrade, and about half of the insurers' credit ratings would experience “moderate stress.” In this worst-case scenario, the default rate for junk-rated debt would be about twice the levels seen in 2008 and 2009. These tests focused on debt held by insurance companies that is privately issued and privately rated, such as corporate loans and structured, non-mortgage-backed financing bonds.