How do insurance companies invest in private credit funds?
Short answer
Insurance companies usually invest in private credit funds as limited partners, inside an allocation set by their own investment team. They review the manager's team, track record and documents through a long due diligence process. I am not an insurance investor, so this draws on what I heard from a reinsurance investor and what I have seen in institutional diligence.
Start with the insurer's allocation, not your fund
An insurance company does not decide to buy private credit one fund at a time. It sets an allocation to alternatives, and the investment team fills that allocation with managers it has vetted. Your fund competes for a slice of a budget that already exists.
I interviewed Audi, who oversees alternatives at a $6 billion reinsurance company. I asked what a fund manager should know before approaching a firm like his. His answers showed me how structured this world is.
Audi explains what reinsurance companies do and how he thinks about alternatives and co-investing.
Summary and key takeaways from this video
One point stood out. Audi's family co-invests alongside the insurance company, but only after the company is full.
"Because the insurance company has to get its maximum allocation first before the family can feed in on the pie, so to speak."
That tells you the order of operations. The institution fills its own commitment first. Everything else comes after.
What the diligence process looks like
Insurers sit in the same group as pensions, endowments and sovereign wealth funds. In the institutional world, I have seen managers asked to complete a due diligence questionnaire, often 35 to 70 questions. The first time through, it can take a full business day or two.
Here is what I tell managers about it. Most questionnaires repeat the same core questions. Keep a master version and add every new answer to it. Then you can send a thorough document instead of starting over each time.
I walk through the institutional due diligence questionnaire and how a master version saves time.
Institutions also expect a real team, a track record and numbers on everything. Audited returns are common. If you are early and have little of that, an insurer is probably not your first call.
What a manager can do before the first call
Insurers often hold long-term obligations. So they tend to care about how a strategy behaves, how it is documented and who stands behind it. The details vary by company and by jurisdiction. Ask each insurer what it needs, and do not assume.
- Write down your strategy, fees, terms and risk controls in plain language.
- Build a master due diligence questionnaire from every question you have been asked.
- Document your team, your track record and your service providers.
- Ask each insurer what size of commitment and what type of manager it considers.
Many managers talk to a securities attorney about their offering documents and investor eligibility before approaching institutions. This page is general information and not legal advice.
At Family Office Club, we talk with many investor types, and each one has a different process. Insurance capital is one of the slower and more rigorous ones. Treat it as a goal to prepare for, not a quick win.
Facts and figures
- Audi oversees alternatives at a $6 billion reinsurance company.
- In the author's experience, institutional due diligence questionnaires often run 35 to 70 questions.
- A first-time questionnaire can take one to two business days to complete.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Re-Insurance Company Institutional Investor Mandate Interview, 2 Critical Core Due Diligence Tools - Episode 4. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around offering documents, investor eligibility rules and institutional investor requirements. Do not use AI to write your own legal agreements.
Next moves
- 1Build a master due diligence questionnaire from the questions you already get.
- 2Gather your team bios, track record and fund documents in one place.
- 3Ask an insurer's team what allocation size and manager profile they consider.
- 4Consider talking to a securities attorney about your offering materials before outreach.
- 5Approach smaller institutions and family offices first if your track record is still short.
Follow-up questions
Do insurance companies invest in private credit directly or through funds?
Many invest through funds as limited partners. Some also invest directly or co-invest. It depends on the insurer's size, team and mandate.
How big does a fund need to be to approach an insurer?
I do not have a single number. Institutions generally want an in-depth team and track record, so ask each insurer about its minimums.
What should I send an insurer first?
Send a clear summary and your completed due diligence questionnaire. A master version with thorough answers saves time on both sides.
Related questions
- How do I raise capital from a foundation?Start by checking whether your fund is large enough.
- What is the difference between institutional and retail capital?Institutional capital comes from organizations that invest on behalf of others, such as pensions, endowments and large managers.
- How do I get on a pension consultant's approved list?There is no single form that gets you on the list.
- What track record do institutions require before investing in a fund?Many institutions want a team larger than two or three people, a track record of about seven years or more, and at least a dozen deals done.
Work through it with the how much to raise calculator. See all institutional investors resources.