Insurance Meets Private Credit Evolution

In Brief:

The insurance industry is undergoing a fundamental transformation as insurers increasingly leverage their balance sheets to invest in private markets, fundamentally changing the relationship between asset managers and insurance companies. Phil Waldeck, PGIM's Head of Multi-Asset and Quantitative Solutions overseeing nearly $140 billion in AUM, brings a unique perspective having served as Prudential's Chief Transformation Officer, CEO of its Workplace Solutions Group, and architect of its pension risk transfer business which he grew to over $170 billion. In a conversation at on the Alt Goes Mainstream podcast, Waldeck revealed how the traditional model of insurers simply matching assets to liabilities has evolved into a sophisticated strategy where asset availability now actively informs liability pricing and product design—a shift that's reshaping both the insurance and alternative asset management industries.

Big Picture Drivers:

• Asset-Liability Management Complexity: Insurers must match their investment strategies to the specific duration, liquidity, and risk profiles of different insurance products, from pension risk transfers to retail annuities to whole life insurance

• Scale Consolidation: The private credit market increasingly favors large integrated platforms that can provide both origination capabilities and reliable capital deployment to borrowers

• Borrower Migration: Companies are choosing private credit over public markets for greater certainty, speed, and relationship-based lending that public markets cannot provide

• Regulatory Evolution: New frameworks in Europe and Japan are opening massive opportunities for private credit expansion beyond the U.S. market

Key Themes:

• Integration Advantage: The convergence of insurance and asset management within single platforms creates superior capabilities in understanding both liability structures and investment opportunities across public and private markets

• Market Sophistication: Private credit has evolved from simple private placements to an extraordinarily complex menu including direct lending, CMBS, asset-backed finance, residential mortgages, private CLOs, and rated feeders

• Talent Retention: Successful private credit platforms must balance entrepreneurial investment culture with the distribution scale and brand recognition that keep top originators from spinning out

• Customization Over Cookie-Cutter: The "perfect meal" of private credit varies entirely based on the specific liability profile being served, making one-size-fits-all approaches obsolete

Key Insights:

• Insurers have shifted from a passive "I have these liabilities, what assets do you have?" approach to an active "I have these assets, what liabilities are the right combination?" strategy, where asset supply now informs pricing and product scaling.

• PGIM's $1 trillion platform across public and private credit provides unique insights because understanding both markets reveals where value exists and how to construct optimal portfolios for different insurance liability profiles.

• Private credit originators need predictable and scalable capital streams to maintain borrowing relationships, making distribution capabilities and brand recognition as important as origination talent in retaining top performers.

• The wealth channel should invest in a diversified mix of private credit flavors with "eyes wide open" awareness that even semi-liquid products have constraints and should be counted on for diversification and incremental yield, not short-term liquidity.

• Organic building of capabilities and teams over time is preferable to fast acquisition due to cultural challenges, though strategic additions remain necessary for specific niches or additional capacity in an increasingly complex menu of private credit options.

• The trend toward "do more with fewer firms" reflects investor desire for integrated platforms that can package complete portfolio solutions rather than forcing clients to select every individual ingredient from an overwhelming array of choices.

Memorable Quotes:

• "When people say private credit, it's like saying food and the breadth of things that are on that menu is extraordinary. And if you only eat the sugar products as opposed to these flavors of protein with those vegetables, the complexity of it requires the right understanding." - Phil Waldeck, explaining why sophisticated asset-liability management requires understanding the full spectrum of private credit instruments

• "That meal is entirely dependent on the liability. The insurance industry used to be I have these liabilities, what assets do you have? Now it's I have these assets, what liabilities are the right combination." - Phil Waldeck, describing the fundamental shift in how insurers approach product design and asset allocation

• "Count on it for diversification. Count on it for incremental yield, especially when spreads are tight. Do you think discipline in investing will start to taste better over time?" - Phil Waldeck, advising wealth channel investors on the proper role of private credit in portfolios

• "Often scale is toxic to investment cultures. As firms get bigger, many of them struggle to keep the culture. And that's where having the right leadership and the right core culture as you get bigger still keeping the quality and the things that those private lenders respect and value." - Phil Waldeck, addressing the challenge of maintaining entrepreneurial culture while achieving necessary scale

• "You need to give great chefs all the tools and products they need but in a bigger scale platform and with a steady flow of customers into the restaurants that those chefs aren't mag repairmen. They're actually delivering the meals. That's their identity and purpose." - Phil Waldeck, using a culinary metaphor to describe the balance between empowering investment talent and providing institutional infrastructure

The Wrap: 

The conversation reveals an industry at an inflection point where the traditional boundaries between insurance and asset management are dissolving. Success in private credit increasingly requires the integration of three elements: deep expertise across both public and private markets, sophisticated asset-liability management capabilities to serve diverse insurance products, and the scale to provide both origination talent and reliable capital deployment. As retail investors gain access to private credit through the wealth channel, the complexity of choice—and the need for trusted advisors or integrated platforms to navigate it—will only intensify. The future belongs to firms that can maintain investment culture while achieving institutional scale, package complex solutions into digestible offerings, and adapt their "meal" of private credit to the specific appetite of each liability profile they serve.