At L&G, we're committed to embracing innovation when it has a tangible benefit to our clients.

This approach has led us to adopt a deeply insurer centric approach to designing private credit solutions, beginning with understanding the precise financial, regulatory and strategic objectives of our customers. We've been able to showcase the full strength of this approach, building highly tailored private credit mandates that unified origination, structuring and portfolio management within a single platform. The aim is to meet client needs while also offering convenience and a seamless client experience.

Our process starts by engaging closely with clients to determine specific return ambitions, credit quality thresholds and liquidity requirements. This ensures the investment solution is aligned fully with insurers' balance sheet needs and long term strategic priorities.

A key early focus is clarifying return and ratings objectives. As part of this, we'll emphasise and advocate for transparent risk methodologies and internal credit modelling, ensuring strategies can withstand regulatory scrutiny and seek to meet a need for predictable, capital efficient performance.

"Our solutions broad access across the private credit universe - from investment grade through sub investment grade - spanning multiple asset classes (corporates, infrastructure, real estate and alternatives) and geographies; these types of offerings will increasingly characterise insurance portfolios going forward." – Stuart Hitchcock, Head of Portfolio Management, Private Credit, L&G's Asset Management business

We also believe it's critical to pay attention to liquidity and duration structuring. We've found insurers are likely to seek out portfolios that are able to flex across liability durations while offering defined medium term liquidity features and a hard maturity cap on individual assets.

We believe L&G is in a place to deliver on these requirements due to our cross-platform private credit capabilities. By leveraging our internal expertise and those of our partners, such as Pemberton Asset Management, we are able to offer exposures across markets, particularly in parts of the sub-investment grade universe, creating profiles that are designed to balance long term value generation with practical liquidity management suited to insurance balance sheets.

Another central objective we strive for is capital efficiency, particularly given insurers' needs to optimise under regulatory capital frameworks (e.g., Solvency II, Solvency UK). L&G's structuring expertise allows us to design portfolios which are optimised across different lens including a view on capital.

Critically, these design considerations are integrated into a single governance and operational framework – providing a 'one stop shop' for clients. This offers a consolidated point of access to L&G's extensive private credit capabilities while ensuring consistent oversight, reporting and risk management throughout the process.

Investment considerations

When constructing a private credit solution for insurers, our starting point is ensuring a holistic understanding of risk, regulation, liquidity, sustainability and accounting treatment.

By providing oversight of the whole solutions as well as flexibility to evolve strategy over time, we believe we can help insurers manage the risks and higher workload associated with private market assets." – Aniket Das, Head of Multi-Manager Solutions, Solutions, L&G's Asset Management business

This may involve, for example, a goal of delivering a particular net spread above a risk-free rate while maintaining a specific level of credit quality across a portfolio.

Achieving this likely involves seeking out a multi asset strategy that, where appropriate, blends investment and sub-investment grade private credit while also allocating across multiple managers. We see such an approach seeking to deliver both diversification and capital efficiency, while aligning portfolios with the insurers' solvency, duration and credit quality targets.

Strong governance is another essential component. Ensuring this provides granular transparency across ESG metrics, solvency impacts, risk analytics and portfolio construction, something we see as critical for insurers who must evidence compliance across multiple regulatory dimensions.

Ultimately, L&G's approach illustrate how insurers can look to access diversified, capital efficient private credit exposure through a model that integrates investment expertise, regulatory alignment, sustainability principles and operational simplicity. It represents not only innovative investment structures, but also a blueprint for how private credit can be engineered around the precise needs of modern insurance balance sheets.