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Fitch flags governance risks for US life insurers after Delaware reclass
Fitch placed Delaware Life Insurance Company on Rating Watch Negative after affiliated private credit holdings rose to 40% of invested assets from 2% at year-end 2025.
Fitch Ratings has raised governance and disclosure concerns for the US life insurance sector after Delaware Life Insurance Company reclassified certain investments as affiliated holdings, a change Fitch said reflects insurers’ growing use of private credit and more complex affiliated investment and reinsurance arrangements.
Fitch said the shift can make risk assessment harder, particularly when transparency is limited and oversight and disclosure frameworks are not sufficiently robust. The agency added that weaker practices could affect confidence in insurers’ financial reporting, investment management and capital strength, even if earnings appear stable and solvency remains adequate.
Fitch reported that Delaware Life’s affiliated investment exposure increased by almost 20 times following the reclassification, reaching 40% of invested assets versus 2% at year-end 2025. Fitch said the 40% level was the highest among the North American life insurers in its rated portfolio at year-end 2025.
Fitch said affiliated investments are not inherently credit negative when supported by effective governance and strong risk controls, but could become credit negative where board supervision, oversight and disclosures do not adequately match the complexity of insurers’ business models. The agency expects governance practices and disclosure standards for affiliated exposures to become increasingly important factors in credit assessments over the near to medium term.