Japan¡¯s largest life insurers are continuing plans to increase private credit investment in the fiscal year beginning April amid recent warning signals about the health of the sector, according to a survey by Bloomberg News.

Nippon Life Insurance, Meiji Yasuda Life Insurance and Dai-ichi Life Insurance said that they would maintain their current investment plans for the private lending sector, the survey conducted this month showed. Sumitomo Life Insurance said its views on private credit investment haven¡¯t changed but declined to comment on its investment policy.

Life insurance companies have joined global investors in a private debt market binge in search of higher yields. But the sector has been hit by a recent wave of capital outflows and losses, tainting the allure of the asset class.

In February, Barclays and Atlas SP Partners were among financial companies exposed to the collapse of Market Financial Solutions in the U.K. Earlier this month, BlackRock curbed withdrawals from one of its biggest private credit funds after client requests for redemptions spiked.

The MFS case ¡°is largely attributable to fraud at an individual company,¡± and at present the possibility of systemic risk spreading to the entire market is limited, Nippon Life said in its survey response. ¡°This has once again highlighted the importance of due diligence in this market, which is outside the framework of traditional banking regulations.¡±

The three other insurers also categorized MFS as an isolated incident in the survey and said they believe the impact on the market as a whole will be limited. Careful risk management was the key to successful investment in private credit, the insurers said.

Dai-ichi Life said it increased private credit investment by about ?40 billion ($252 million) in the nine months ended December. It said it would continue to invest ¡°cautiously and selectively¡± in the fiscal year starting April 1.

Nippon Life will maintain its fundamental investment policy to increase holdings of alternative assets including private credit for the fiscal year ending March 2027 to improve the risk-return efficiency of its portfolio.

Meiji Yasuda has laid out plans to make about ?600 billion in new private asset investment, which includes both equity and debt, over three years to the fiscal year ending March 2027.

The global private credit market has grown to around $1.8 trillion. While they offer higher yields than bonds, such investments have low liquidity and long lockup periods, and suffer from a lack of credit risk information.