Blackstone takes a customised approach to working with its insurance clients, and believes its scale and capital-lite approach makes it uniquely placed to partner with its clients globally. The firm's global head of insurance business spoke to Insurance Asset Risk.

By Pete Carvill, Insurance Asset Risk

Insurance Asset Risk (IAR): What do you think has set Blackstone apart?

Philip Sherrill (PS): We have a singular goal, which is to do an amazing job for our clients. In 2024, we were really able to deliver on that goal: we originated $85bn in credit assets, of which $46bn were for our insurance company clients. On average, the assets we originated for our insurance clients yielded 190 bps more than the comparable investment grade corporate bond with equivalent duration and ratings.

IAR: That's an impressive result. How have you managed this?

PS: We are directly originating performing credit at unmatched scale, and we're doing it in a manner that's fit-for-purpose to our insurance clients – very high credit quality, generally longer duration, predictable cash flows – all of that supported by insurance-specific technology, reporting, and analytics. What our scale lets us do is to bring borrowers all across the economy right up to our investors, improving underwriting, improving structuring, and eliminating intermediaries, which ultimately improves efficiency and results in better pricing.

IAR: And this is done via your credit platform? Is that correct?

PS: It is. Our credit platform is the largest third-party business of its kind in the world, with $450bn of assets across corporate, asset-backed, and real estate credit. And almost $250bn of that is managed for insurance companies. It's our single biggest client group across the firm, and it's resourced appropriately as a result. All of that sets us apart, and we're hoping we can do an even better job in 2025.

IAR: Can you tell us a little more about your approach to insurance across the world. You use what is known as a 'capital-light model'—maybe you could explain a little to our readers what this means and how you apply it to your business.

PS: In the insurance business, what that means is that Blackstone doesn't own an insurance company on the balance sheet of the firm. We think that's important for a few reasons, one of which is that we don't want to compete with our clients for assets. Insurance companies doing business with Blackstone – no matter how big or small - know that they'll participate "shoulder to shoulder" in every asset we originate that fits their appetite. We also don't want to be in the position of competing with our clients for customers.

IAR: So where, then, would your focus be?

PS: We focus on the things we believe we can do better than anybody else in the world: forming private capital - and many insurance companies look to Blackstone to raise money for use in their businesses - and originating and managing assets.

IAR: It's been widely reported about how you brought together your credit and insurance businesses. What benefits have you found from there, both for you and for your customers?

PS: We want our clients to benefit from the best that Blackstone has to offer. Being as active in credit markets as we are – whether the end investor is an insurance company, another institution, or an individual - provides us with insights that we want to make sure are shared across the platform to help us and our clients make the best decisions.

We also want all of our clients to benefit from uniformity across the investment process, and we want to make sure that the borrowers we work with have access to all of the applicable Blackstone pools of capital, with different profiles, return expectations, and risk tolerances. This is further enhanced by the scale that's at the heart of Blackstone's competitive advantage. In the short period of time since we brought the businesses together, there's already been enormous value delivered to clients.

IAR: We've seen a lot of private asset managers enter insurance in the last decade. Is there still room for more, is it overcrowded, or are we finding a state of equilibrium?

PS: There's a lot of need, across the insurance business, for what companies like Blackstone provide. Insurance companies need access to capital to grow and to serve their customers, and private sources of capital have proven to be well suited to insurance companies' needs. This capital need has accelerated over the last several years as certain product lines have grown significantly – driven by demographics, savings patterns, and the absence of traditional retirement tools. Insurance companies also need assets of high credit quality, and they are uniquely equipped to benefit from the extra return that can be earned by investors who are willing to bear illiquidity in their investments. Insurance companies have always been very good holders of less liquid assets. Some of these needs remain unmet today, but we think that scale is an enormous advantage in this business; it may turn out that smaller players who are later entrants face challenges in getting to scale.

IAR: Your origination platform is interesting. Can you tell us some more about it and what it brings for your customers?

PS: What we've been able to develop over the many years of building this business is a deep network of contractual and non-contractual relationships that help us to identify and originate credit assets for our clients. The Blackstone network is vast, and it reaches across credit, real estate, private equity, infrastructure, life sciences, and all of the geographies in which Blackstone is active today. It includes investments we've made in teams, in companies, and in know-how. The proof of this model's success is in what we've been able to originate. The $85bn of origination last year is a demonstration of the scale of the Blackstone network in action.

IAR: What trends have we been seeing across the UK and Europe? How has Blackstone worked to address these? What sets your solutions apart from other firms?

PS: Many of the same dynamics that apply in the US – a need for capital as insurance companies grow to serve increased demand for insurance products, a need for assets that provide insurance companies with an appropriate return while maintaining very high credit quality – are at play in the UK and Europe, as well. As a result, we are very active with our UK and European clients across both of these topics, and doing this to the high standard of client service we set for ourselves is one of our key areas of focus at the moment.

IAR: But surely it can't always be a one-size-fits-all approach?

PS: There are important differences among markets, though – the popular products in each market are different, in many cases changing what's desirable for an insurance company CIO as they seek assets – and the regulatory dynamics are different, as well – in both cases relative to the US market and among European jurisdictions. And the backdrop is that while European private credit has seen substantial growth over the last decade, expanding at an impressive annual rate of about 20%, it is still a meaningfully smaller market than it is in the US.

IAR: So how does Blackstone see its role in these spaces?

PS: It is our job to identify the best solutions for our UK and European clients to meet their strategic goals, and we're fortunate that many of the same tools we've developed in our US toolkit are applicable. We are dedicating the resources to continue growing our ability to serve insurance clients in these markets.

IAR: Looking ahead to 2025 and beyond, what are Blackstone's plans and what does it wish to achieve? What trends do you imagine that we are going to see?

PS: We ended the year with one of the strongest quarters in our history, and, thankfully, that momentum has continued into early 2025. We think the recent insurance trends – the need for access to capital and the need for appropriate assets – are very durable macro trends that will require focus for the foreseeable future. At Blackstone, to serve our clients, we need to continue to invest in our ability to deliver in each of those areas.

IAR: What does that entail?

PS: That will include growing our ability to originate appropriate assets even further than we have already, forming new partnerships with insurance companies that can benefit from what we do on behalf of our clients, and extending our business into new geographies. In order to accomplish those goals, we'll need to continue to attract the highest level of talent, as Blackstone has been able to do around the world since its inception.