Private Credit Retreat Signals Market Caution From Brookfield

Brookfield Backs Away From a Crowded Trade

Bloomberg reports that Brookfield Wealth Solutions has scaled back its private credit investments. According to CEO Sachin Shah, the insurer began reducing exposure six months ago and is now nearly out of the market.

Shah spoke at the FT Global Insurance Summit in London. He said private credit is attracting too much capital, pushing yields down while credit risk remains unchanged.

“If everyone including all the newspapers talk about an asset class, it’s likely overbid,” Shah said.

Weaker Terms, Lower Returns

Shah also warned that loan covenants are weakening. That means less protection for lenders, even as yields fall. He argued that now is the time to pivot away from the trend—not follow it.

Industry Trend: Full Steam Ahead

Brookfield’s pullback stands in contrast to what other insurers are doing. Many continue to invest in private credit to match long-term retirement products. At the end of 2024, private credit made up one-third of the $6 trillion held by US insurers, according to Moody’s.

Retail Demand Fuels Growth

More retail investors are also entering the space. Private credit is now included in more retirement products and wealth platforms. Moody’s recently warned that the retail rush could compress spreads further and increase risk.

Why It Matters

Shah’s comments raise concerns about the sustainability of returns in private credit. He’s not predicting losses—but questions whether chasing yield is worth the risk.

“The decision you have to make as a business owner is, ‘Do you wanna do what everybody’s doing or do you wanna pivot?’”

What’s Next

Private credit isn’t going away—but the flood of capital may change its risk profile. Brookfield’s move may signal a shift for cautious investors, even as others continue to pile in.