KKR-Owned Insurers' Private Credit Hits 20% Allocation as CDS Costs Climb
KKR•Life insurers owned by KKR & Co. increased their private credit allocations to a fifth of their $4 trillion fixed-income holdings by end-2025, up from 18% a year earlier. Insurers’ CDS spreads are widening marginally as hedge funds ramp up $5.5 billion in net notional bearish bets against the sector.
1. Expanded Private Credit Holdings
KKR-owned life insurers now allocate roughly 20% of their $4 trillion fixed-income portfolios to private credit, up from 18% at the end of 2024. This shift reflects a broader industry trend toward illiquid debt as investors chase yield in a low-rate environment.
2. Hedge Funds Increase CDS Wagers
Hedge fund manager Lee Robinson and others have boosted net notional bearish positions on insurers’ credit default swaps to $5.5 billion, targeting firms such as Lincoln National, MetLife and Berkshire Hathaway. These bets aim to profit from potential writedowns in private credit holdings.
3. Rising CDS Spreads and Potential Risk
Credit-default swap spreads for major insurers have edged higher, with Lincoln National quoted at 142 basis points. Even marginal widening raises concerns over liquidity strains and possible write-downs if private credit valuations falter, posing second-order risks to backers like KKR.
