Private Credit Further Development

There have been two successful working parties explore the development of the private credit market, covered from the Life Insurance and Finance and Investment practice areas. The two key outputs that came from this were a key observation of industry practice, which provoked ideas for best practice amongst insurers. It also created an ‘encyclopaedia” of private credit information, from the consideration of different asset classes and their application to insurers and pension schemes.

The purpose of the working party is to:

• Review current literature, particularly focusing on the analysis already performed by the previous working parties, to ensure that the gaps suggested in this Terms of Reference are appropriate and to ensure that current research into the gaps is taken into account.
• Analyse gaps in current research and agree areas of research to be taken forwards.
• Respond to consultation papers from regulators and from government bodies. Whilst we expect to liaise most closely with UK and European bodies, it may be helpful to consult or consider guidance from other regulators (e.g. BMA).
• Provoke thought leadership and innovation within the industry through presentations and forums to gain wider input.

Terms of reference

Proposed research areas / workstreams

• Sub-IG private credit and broader application to insurers’ balance sheets, like WP/UL/Shareholder funds
• Workout / downturn practices and case studies – speculative one, given a delicate nature of the same, initial work will be focused on assessing feasibility of this. This might turn into a survey of various insurers.
• ESG considerations with regards to private credit. This has a potential to evolve into a research run with a PhD candidate or similar

Output

• The impact of Covid-19 on infrastructure debt