Marsh presses for capital relief on insured loans as AI data center risk swells

What Marsh is asking for

Marsh & McLennan wants banking watchdogs to recognize credit risk insurance in capital calculations, so banks would not have to park as much equity against insured loans. The firm's credit specialities unit counts Azi Larsen as a managing director, who said, "We've been doing a lot of advocacy around that in the US," and added, "Hopefully we'll have a positive answer from the US regulators at the end of the year."

Why data centers are in focus

Demand to hedge AI-related financing has exploded as lenders look for different tools to manage the risks tied to data centers. Marsh regularly helps place credit risk insurance for project-finance transactions, including those linked to data centers. Even with current limits in how the product is treated by US rules, banks are using it more to cap their risk to specific borrowers or sectors as AI lending volumes swell. "Even if they don't get capital relief, they still see value in trying to use it," Larsen said.

European banks have long used credit risk insurance to curb losses and free up capital to originate more loans. The mechanics are straightforward: lenders pay premiums to insure a slice of potential losses on specific facilities. On the activity front, Barclays has pursued insurance protection for more than $10 billion in data center debt, and HSBC has explored a similar move. With McKinsey projecting global data center spending to reach $6.7 trillion by 2030, debt will likely do more of the heavy lifting, making risk tools "mission critical" for lenders, Larsen said.

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The rulebook in motion

Bowman said on Nov 10 that the Federal Reserve expects to finish its latest overhaul of capital requirements within weeks. The package is anticipated to include a reduction in the capital surcharge for the largest US banks and adjustments to risk based capital rules for midsize and large lenders. Those changes, and whether insurance gets fuller recognition, are the near term swing factors for how banks finance AI infrastructure.

There is a separate "Read More" reference to a $40 billion deal in the market. For investors, that signals an active pipeline of transactions around AI and data center credit as banks, insurers and sponsors rebalance who holds the risk.

What it means for your portfolio

If credit risk insurance starts to unlock capital in the US the way it does in Europe, banks could recycle balance sheets faster into AI infrastructure loans. If it does not, the product still has a role as a risk cap while lending grows. Either way, the mix of who carries AI data center exposure is shifting, which can ripple through bank capital ratios, insurance pricing and the cost of financing for tech infrastructure.

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