Private equity is going after life insurance

I am so sick of seeing shit like this about private equity. But it is the inescapable present reality.

Private equity firms continue to stalk insurance company takeovers and critics say the potential for a financial disaster grows along with that trend.

Americans for Financial Reform, a Washington, D.C.-based nonprofit group that advocates for stronger regulation of Wall Street firms, is the latest group to raise alarm bells on what it deems to be risky private equity investment of policyholder funds.

AFR's new study grew out of its analysis of the relationship between private equity and public pension funds, said Andrew Park, senior policy analyst for the group. The PE impact on pensions is now understood, he explained.

"What has been less understood is how much of this new capital that private equity is getting is coming from the acquisition of insurance companies, and then in turn, insurance companies buying up a lot of the assets that private equity tends to originate," he added. "It's almost like you have this circular financing scheme that has been created now with private equity and insurance."

By the second half of 2023, private equity firms owned $774 billion in life insurance assets, or 9% percent of the life insurance industry, according to the AM Best insurance analyst. Likewise, PE firms are estimated to manage $5.7 trillion in global assets, giving these firms ample ability to buy up even more insurance companies, AFR noted.

The AFR report, Risky Business: Private Equity’s Life Insurance Gambit, comes amid growing pressure on private equity firms to submit to stronger oversight. Over the past month, the Financial Stability Oversight Council and the International Monetary Fund both released their own reports questioning private-equity control of insurers. - Insurance News Net