US Life Insurers Held $807 Billion of Highly Illiquid Credit

US life insurers held about $807 billion of the most illiquid kind of fixed-income instruments last year, according to a new study by Moody’s Corp., raising concern about overall liquidity and concentration of assets in the sector.

Such holdings reached 20% of the life insurance industry’s $4 trillion fixed-income portfolio at the end of 2025, up from 18% the year before, according to the report released Monday. The securities used for those calculations bore private-letter ratings, didn’t carry a formal rating assigned by a third-party firm or couldn’t be valued with observable market prices.

Credit ratings are a crucial ...