Private equity stake in life insurers draws new round of critical reports
January 17, 2024 by John Hilton
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.
Wink’s Moore on the Market: “It’s almost like you have this circular financing scheme that has been created now with private equity and insurance.
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.
McKinsey reported that 80% of private equity-owned insurers shifted their investments into higher-risk securities, especially CLOs.
State insurance regulators are not eager to cede any oversight duties to the federal government. Ongoing attempts by federal regulators to collect climate data and regulate annuity sales are met with repeated resistance from the NAIC and its members.
There is no one regulator that is responsible at looking at collectively at how the activities of insurance companies are posing threats to the entire financial system.”