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Your Friday Five

Every week our team rips through 200+ insurance, legal, and market-risk articles so you don't have to!

Three developments caught our attention this week:

• Over 100 C-suite insurance leaders now rank AI adverse outcomes as their #1 long-term emerging risk ahead of climate, armed conflict, and demographic shifts. The migration from geopolitical to technological risk is accelerating.
• The U.S. Treasury announced meetings with domestic and international insurance regulators to examine the $2 trillion private credit market. Fund-level leverage, rating reliability, offshore reinsurance, and liquidity are all on the table.
• Goldman Sachs surveyed 434 insurance CIOs and CFOs. 62% are increasing private asset allocations. 54% see a late-stage credit cycle. And 62% now use AI operationally, up 33 percentage points in two years.

First, If you'd rather listen check out the audio version.

The C-Suite Risk Map Is In Flux & AI Now Leads the Longer-Term Outlook

Summary

The Society of Actuaries and Casualty Actuarial Society released their 19th Annual Emerging Risk Survey this month, polling over 100 Chief Risk Officers, Chief Actuaries, and senior thought leaders in January 2026.

The headline finding: 27% of C-suite participants selected AI adverse outcomes as the single most impactful risk three or more years out. That's up from just 8% who selected it as their top near-term risk for 2026. No other risk showed that kind of acceleration. Near-term, the priorities remain economic and geopolitical.

Financial volatility (25%) and geoeconomic/globalization shifts (19%) dominate the 2026 outlook.

But extend the horizon past three years and the entire risk map migrates. Geopolitical risks drop out of the top five entirely. AI adverse outcomes and cyber events take the lead, followed by financial volatility and long-term climate change.

The risk combination that concerns C-suite leaders most? AI adverse outcomes paired with cyber events, selected by nearly 10% of respondents as the most impactful long-term combination.

(source: SOA Research Institute / Casualty Actuarial Society)

So what?

The migration pattern matters more than any single ranking.

The risks executives manage today (economic, geopolitical) and the risks they worry about tomorrow (technological) are fundamentally different categories. That gap creates a planning challenge for every financial institution building its enterprise risk framework.

Boards should ask where AI sits in their risk register.

If it's still categorized under "technology," the C-suite's own peers are signaling it belongs at the enterprise level. FI-focused underwriters are already responding: AI governance questions are appearing in D&O and E&O renewal applications with increasing frequency, and carriers that led with AI exclusions in 2025 are watching which accounts can demonstrate documented oversight frameworks. Climate risk offers the instructive parallel here — it's declining in "emerging" rankings because carriers absorbed it into core ERM.

AI hasn't reached that stage yet, and boards positioning for it now gain lead time.

Treasury Wants to Talk About Your Private Credit Exposure

Summary

The U.S. Treasury Department announced this week that it will hold a series of meetings with domestic and international insurance regulators to examine recent developments in private credit markets.

The conversations begin this month and continue through early May. The stated goal: improve fact-based, transparent oversight of private credit as the sector's interactions with regulated financial institutions increase.

Four specific areas are on the agenda.

Fund-level leverage (the amount of borrowed money used within investment funds themselves). The consistency of private credit ratings. The use of offshore reinsurance structures (arrangements where insurance obligations are transferred to entities in other jurisdictions, sometimes with less regulatory oversight). And the liquidity of investments held within the $2 trillion non-bank lending sector.

The timing is pointed.

Recent bankruptcies at auto-parts supplier First Brands Group and used-car retailer Tricolor exposed significant private-credit lender losses. Major funds including Ares, Apollo, and KKR have restricted redemptions from direct lending vehicles. Bank of England Governor Andrew Bailey has cautioned against treating these failures as isolated cases.

(source: Reuters, U.S. Treasury Department)

The LION Lens

What happened — Treasury convened domestic and international insurance regulators for ongoing oversight of the $2 trillion private credit market (source: Reuters / Treasury).

Why it matters — Insurance general accounts are among the largest and fastest-growing allocators to private credit. Goldman Sachs' 2026 survey found 62% of insurers plan to increase private asset allocations this year, with Asset-Backed Finance leading at a net 38% allocation increase.

Practical implications — The four focus areas map directly to insurer balance sheets: rating consistency affects capital charges, offshore reinsurance affects reserve credit, fund-level leverage affects counterparty exposure, and liquidity assumptions affect stress-test outcomes. European regulators launched their own review of how insurers value private credit the same week, signaling this is a global supervisory priority, not a domestic one.

So what?

Treasury Secretary Scott Bessent framed it clearly in February: when assets move from private credit lenders into regulated financial institutions, Treasury gets involved.

That statement puts a boundary marker on a sector insurers have been expanding into aggressively. The Goldman Sachs survey shows 54% of insurers believe we're in a late-stage credit cycle. Yet allocation intentions remain strongly positive. Late-cycle private credit demands tighter underwriting standards, more conservative leverage assumptions, and liquidity stress testing that accounts for redemption restrictions already emerging at major funds.

There's a second-order effect for insurance buyers.

If private credit losses pressure carrier surplus positions, the downstream impact hits capacity and pricing in the very lines our clients purchase. A carrier that takes writedowns on general account private credit holdings has less surplus to deploy against D&O and E&O towers.

That transmission from investment stress to underwriting capacity is exactly the risk boards should track now, not after it shows up in renewal quotes.

The LION POV

Here's how we're advising clients:

• Map your private credit exposure by fund structure. Distinguish between assets held directly and those accessed through commingled vehicles with redemption gates. Your counterparty risk profile is about to get more scrutiny.
• Pressure-test your ratings methodology. If your capital modeling relies on private credit ratings that haven't been stress-tested against the Treasury's consistency concerns, your RBC position may carry more uncertainty than your board realizes.
• Review offshore reinsurance arrangements that touch private credit. If ceded reserves are backed by private credit assets held in offshore vehicles, anticipate questions from regulators and rating agencies alike.

The institutions that perform this diligence before regulators ask for it will be positioned as leaders, not respondents.

(source: Reuters, U.S. Treasury Department, Goldman Sachs Asset Management)

Want to discuss how private credit oversight shifts affect your institution's coverage program? Contact LION Specialty for a confidential review.

434 Insurance CIOs Reveal Where the Capital Is Going and Where AI Has Already Arrived

Summary

Goldman Sachs Asset Management released its 15th annual Global Insurance Survey this month, drawing responses from 434 CIOs and CFOs representing roughly half of global insurance balance-sheet assets.

The AI acceleration is the standout data point. 62% of insurers now use artificial intelligence operationally, up from 48% in 2025 and 29% in 2024. That's a 33-percentage-point jump in two years. Reducing operational costs remains the leading use case at 83%, but evaluating investments rose 13 percentage points year-over-year to 42%. AI is migrating from the back office to the investment desk.

Meanwhile, the macro outlook carries a tension worth watching.

88% of insurers expect the S&P 500 to rise in 2026. But 52% cite a US economic slowdown as their top macro risk, and 55% expect a recession within three years.

(source: Goldman Sachs Asset Management, Global Insurance Survey 2026)

So what?

Two signals deserve board-level attention.

First, the AI adoption curve is steeper than most governance frameworks anticipated. When 62% of your peers deploy AI and 42% use it to evaluate investments, the question shifts from "should we adopt?" to "are our controls keeping pace with deployment?" The SOA survey's finding that AI adverse outcomes is the #1 long-term emerging risk gains weight when you see the adoption velocity driving it.

Second, the late-cycle conviction paired with increasing private allocations creates a positioning question every investment committee should address. The Goldman Sachs data shows 43% of insurers believe investment opportunities are getting worse, yet capital continues flowing into private markets. That's a conviction that managers will outperform a deteriorating market.

It may prove correct, but it should be a documented thesis the board has reviewed, not a drift.

The Bottom Line

The insurance C-suite is telling us three things at once: AI is the risk that gives them heartburn long-term, private credit is the allocation they keep increasing, and the federal government just sat down at the table to ask questions about both. Boards that connect these threads before their next committee meeting will be the ones setting the agenda, not reacting to it.

Risk Committee Radar: 3 Items for Your Next Meeting

1. Private credit portfolio review. What percentage of our general account is in private credit? Has our valuation methodology been reviewed in light of the Treasury's rating-consistency concerns?
2. AI risk classification. Where does AI sit in our enterprise risk register — emerging, technology, or enterprise-level? Who owns it? 27% of C-suite peers rank it as their #1 long-term threat.
3. Investment-risk alignment. If we expect late-cycle credit conditions, have we modeled the downside on illiquid holdings and documented the thesis for the board?

In Case You Missed It!

Friday is for market signals. Wednesday is for structural intelligence, insider to insider.

This week we launched a three-part Wednesday Intelligence series called The Six-Line Silent AI Audit. We audited six policy lines for silent AI gaps. Every definition assumed a human.

• Part 1 (live now): D&O and EPLI. Why every "wrongful act" definition in your D&O form assumes a person made the decision, and why algorithmic discrimination doesn't map to your EPLI form's coverage trigger.
• Part 2: E&O and Cyber. The professional/product liability boundary for AI-assisted advice, and why deepfake wire fraud falls between three coverage sections without triggering any of them cleanly.
• Part 3: Fiduciary, Crime, and FI Bond. The full audit framework, the four governance documents moving from underwriting preferences to conditions of coverage, and what leading FI underwriters are asking for at renewal.

If this week's Friday data on AI as the #1 long-term emerging risk caught your attention, the Wednesday series is the line-by-line audit that turns that signal into a renewal strategy.

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​Stay Covered Out There Y'all,

TASH & FLIP

Co-Founders and Managing Partners

LION Specialty
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P.S. Boards get exposed by D&O mistakes they never see coming. We built a 5-day email course on what to watch for. Comment BLUEPRINT and we'll send it.
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P.S.S. Nothing in this briefing constitutes legal advice. These are the opinions of the founders. It's market intelligence designed to help you ask better questions of your advisors and make sharper decisions at your next insurance renewal.