Insurers Are Funding the AI Data Center Boom — Now the NAIC Wants to Know if the Credit Ratings Hold Up

A significant regulatory development is unfolding in the US insurance sector, targeting one of the most important structural shifts in how insurers invest. The National Association of Insurance Commissioners (NAIC) has initiated a review of the credit ratings attached to data center and private-credit investments held by insurance companies — assets that have become increasingly attractive as insurers help finance the massive build-out of AI infrastructure across the United States.

The regulatory tension is direct. The NAIC helped shape the conditions that made privately rated, investment-grade infrastructure debt appealing to insurers seeking yield and duration to match their long-dated liabilities. Now it is empowered to challenge the ratings on which that appeal depends. Since January 1, 2026, the NAIC has held what is known as the 'discretion amendment' — authority adopted at its Fall 2024 meeting that allows it to challenge and override credit ratings, both public and private, where they differ from the NAIC's own analysis by more than three rating notches. The data center review is the clearest demonstration yet that the regulatory baseline for private credit is tightening.

The scale of the underlying trend explains the urgency. Bonds carrying private placement numbers made up 23.4% of insurers' total admitted bonds in 2025, up sharply from 18.3% in 2021, according to S&P Global Market Intelligence. Life insurers in particular have been major participants in private credit, drawn by the match between long-dated private debt and the long-term nature of their future claims obligations. The broader private credit market is projected to reach $2.6 trillion by 2029 and potentially $4.5 trillion by 2030.

The NAIC restructured its entire investment oversight apparatus at the start of 2026 in direct response to this growth. The Valuation of Securities (E) Task Force was reorganised into four bodies: the Invested Assets Task Force, the Investment Analysis Working Group, the Investment Designation Analysis Working Group, and the Credit Rating Provider Due Diligence Working Group. PricewaterhouseCoopers was retained in June 2025 to advise on a due-diligence framework for credit rating providers, and the US Treasury has separately engaged state regulators on the implications of private credit growth for insurer solvency.

Data centers present a particular underwriting and valuation challenge that connects regulatory and risk concerns. Hyperscale and colocation facilities often carry total insured property values of $1 billion to $5 billion, and one estimate suggests companies will invest nearly $7 trillion globally on data center infrastructure by 2030, with 40% deployed in the US. For insurers and their investment teams, the question is no longer whether the regulatory baseline for private credit is tightening — it is whether their current holdings, and the ratings underpinning them, are robust enough to survive the scrutiny now formally underway.