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Chicago Fed research points to systemic risk from private credit
Life insurers that have tripled exposures could face a liquidity squeeze, say economists
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Economists at the Federal Reserve Bank of Chicago have warned of the potential for systemic risk stemming from the rush of life insurers into private credit.
In a note published on May 16, the researchers raise concerns about life insurers’ ability to sell privately placed credit instruments in challenging periods.
Ballooning allocations – in particular, to ‘esoteric’ private credit – could be hard for firms to exit should those firms face a wave of surrenders from policyholders, the economists
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