WASHINGTON (Reuters) - Global insurers plan to invest further in the coming years in the growing but opaque private credit market, according to a new report by Moody's Ratings.

In a survey this week of the world's largest insurers, Moody's found that nearly 80% of respondents planned to increase their holdings in at least one class of private credit.

Deemed riskier and less transparent than the public market, private credit deals involving non-bank lenders and middle-market companies have gradually gained market share in the U.S. and around the world over the last several years, as banks have avoided riskier loans to highly leveraged borrowers at elevated interest rates.

Insurers have already increased their private credit holdings in the U.S. to 36% of their total investments in the region, according to Moody's, driven by their attractive returns compared to the more volatile public credit market.

"(Many) insurers have reallocated part of their portfolio toward less liquid assets of similar credit risk because they feel these investments now offer sufficient additional compensation for their lower liquidity," the report's authors wrote.

Despite their lack of transparency, survey participants claimed that investment-grade quality assets account for most of their private credit holdings.

However, the report highlighted the concerns of some survey respondents, that the long-term risk of insurers' growing private credit investments could outweigh their short-term appeal.

"A number of companies we spoke to believe that short-term spread volatility in public markets can overstate underlying credit trends, and is a less important consideration than credit risk for private credit assets, which are held to maturity as long as an insurer is operating on a going concern basis," Moody's noted.

Analysts and market participants have forecast rising delinquencies and defaults among borrowers. As inflation and elevated rates lead more borrowers to avoid default and turn to private credit, insurers are expected to increase their holdings most quickly in assets such as private placements, asset-based financings and commercial real estate loans, according to the report.

As they ramp up their private credit holdings, insurers also run the risk of mismanaging their assets and liabilities, which Moody's warned is "highly credit negative."