For every €1 the re/insurer has deployed in private credit since 2018, losses have affected €0.007, as David Walker discovers
When I once asked the manager of an equities fund how (on earth) he invested in the market he focused on, what with all the 'froth' in the headlines of the day swirling around, he replied: 'You don't get distracted, you know why you do what you do, and you just get on with it'.
Similar counsel might well come from patient investors in private credit these days – despite the 'frothy' news flow.
Headlines about the asset class seem to swing, sometimes inside 24 hours, from trumpeting a strong and enduring investor appetite for all flavours of it, to describing investors rushing to exit from it.
These opposing 'forces' may not be mutually exclusive, of course, but their coexistence can certainly create a somewhat confusing picture of where private credit investing 'is at'.
Perhaps a long, deep breath may be called for - and a source of reliable data that shows the outcome of taking a long-term approach to the class.
Patient capital with long-term intent
Multi-year allocations are not evident at all insurers, but they are at Athora.
The Bermuda-headquartered group laid out its experience from investing in private credit over the eight years to the end of 2025, as part of a 30-page presentation accompanying its recent full-year results.
Clear explanations about its investments, including in private credit, took up 10 of those pages.
Athora's allocation to private credit is by no means insignificant in its mix. The group's €9.3bn deployment to the class accounted for about 18% (2024: 18%) of Athora's general account assets by last year's close, and one-quarter of the combined assets under its management and administration.
And what of the outcome from those investments?
The proof in the pudding
A chart in Athora's presentation, reproduced here, showed cumulative realised losses over eight years worth €129m. That equates to losses affecting about €0.007 for every €1 the insurer deployed into the class.
In truth, the group's loss-experience from the eight years is so minimal, it's hard to discern any particular trend in its development.
Athora said the loss-experience was "consistently below [its] underwriting assumptions", and it elaborated on facets of the portfolio, which might help explain why.
For one thing, the portfolio is diversified, between mid-market lending (35%), private investment-grade investments (23%), direct loans to large-cap firms (21%), commercial real estate (12%) and collateral loans (9%), and also between direct investments in seven distinct industry sectors, plus allocations to "diversified funds".
This spreading means the largest 10 counterparties in Athora's €9.3bn private credit portfolio – "all investment grade with low loan-to-value [ratios, and ] 50% are exposures to diversified asset pools" - account for just 3% of the group's general account. Athora notes, additionally, that "exposures to cyclical sectors kept to a minimum" in the portfolio, overseen by its outsourcing partner and part-owner, Apollo Global Management.
Over half of the private credit sleeve (54%) has LTVs of 50% at most, which Athora describes a "defensively positioned" allocation.
Only about 1% relates to mezzanine and subordinated loans, and management's focus when originating loans is on "strong fixed charge cover ratios". Athora adds, for good measure, the portfolio has "no ratings from Egan Jones," which is a ratings firm that the Bermuda Monetary Authority removed from its list of recognised credit ratings agencies in January.
To be fair, diversifying within private credit has become increasingly possible as the asset class has broadened, or become more varied, over time.
An emphasis on prudence and proceeding with caution is not to say the allocation is static, and Athora notes a "selective deployment into private assets with a focus on liquidity management in the ALM portfolio" in 2025, including rotating into "high-quality investment grade private credit".
Treading cautiously
Caution seems the order of the day on a sector view, too, as Athora explains its "minimal" exposure to software and AI companies represents under 1.5% of its total AuM.
(This pronouncement echoes the responses at the full-year results of Apollo, Athora's main asset manager, whose "highly selective portfolio posture" vis a vis software produced an "intentionally minimal" exposure of "less than 2% of total AuM, with zero exposure to growth software in private equity". Marc Rowan, Apollo's CEO, told analysts "our software exposure rounds to zero".)
Athora proceeds to explain its "small and defensively positioned" €1.1bn CRE debt portfolio spans seven distinct countries, plus 'other' nations. Of the five building types present, the office allocation (37%) is the largest, and exhibits, Athora says, "strong ESG credentials in prime sub-market locations have seen continued demand from tenants".
And of its €800m investment property portfolio, mainly held by Athora Netherlands, the group notes five distinct countries in Europe and an 'other Europe' category, are present, in what the insurer describes as a "high-quality Western European portfolio [where the] majority of rental income is indexed to inflation".
The private credit portfolio, plus the remaining 72% of the general account allocated across sovereigns and supra-nationals (28%), traded corporates (21%), mortgage loans and savings mortgages (14%), net derivatives and cash (9%), alts (8%) and property (1%), have contributed to an uninterrupted widening in the annual gross investment spread for the group since 2020.
Back then, that spread – the difference to relevant risk-free rates for fixed income and total returns for other classes – was 82bps. By the end of last year, it was 203bps. In 2025 Athora said the 4 bps uptick was aided by moving Athora's pot towards the target strategic allocation.
Athora's clear explanations of its private credit holdings are one thing.
But to understand how current news headlines can trumpet both strong demand for the class, and at the same time investors trying to redeem from it – sometimes in the face of funds curbing their redemptions these days – one must, of course, go beyond Athora. (And even beyond journalists' penchant for seizing on short-term trends.)
The view from the platform
One expert worth consulting here is Andrew Kurian, who is CFO at Hedgebay Securities, a firm that helps sellers and buyers promptly exit and enter, respectively, funds including private credit portfolios. In a 'crisis' the deals often happen at discounts to the investments net asset values (NAV) – as is happening now, for private credit.
At present, Kurian certainly describes seeing a change "from a sort of 'pull-to-maturity' mindset, to something more like 'mark-to-market'." This change, he says, "is driving the opportunity, and the tension" in the asset class at present – we imagine also probably the news headlines.
Kurian sees retail investors that are invested in funds as the main cohort exiting the asset class at present – the source of the 'tension', if you like. While there are some institutional allocators trimming and leaving, too, Kurian foresees institutions as the ultimate beneficiaries of the 'opportunity' created by the wash-up: "I'm seeing the retail investors are panicking, and getting out first. Then the institutional investor is going to look at things, and I think they'll end up being net buyers, as opposed to sellers."
To the extent that institutions can buy stakes in illiquid private credit at discounts to NAV – and Kurian sees prevailing discounts at "high teens" up to 50% - they may take up the opportunity.
For now, institutional investors might not deny that the coming months could be a bumpy ride.
But if what Kurian sees now, plays out, the institutional investor community might well look back one day and regard the 'shakeout' of private credit that happened in 2026 as a worthwhile moment to have started building a long-term, patient track record in the class.
Private Credit Deployment v Cumulative Realised Losses (€m)
