UBS Chief Colm Kelleher Flags Systemic Risk In US Insurance Amid Weak Oversight

UBS Chairman Colm Kelleher cautioned that the US insurance industry faces growing systemic risk due to weak and complex regulation amid a surge in private credit investments.

Speaking at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit, Kelleher compared the current situation to the 2007 subprime crisis, citing “rating agency arbitrage” as a key concern.

US life insurers have increased their exposure to private debt to nearly one-third of total assets, or about USD 1.8 trillion, according to CreditSights. The Bank for International Settlements recently warned that smaller ratings firms used by insurers may inflate credit assessments to meet compliance needs. Kelleher said ineffective oversight could trigger broader market disruptions. He also noted that Switzerland faces rising competition in global wealth management from Hong Kong and Singapore, which are attracting more international capital flows.