Private capital groups have invested hundreds of billions of dollars into life insurers since the 2008 financial crisis, with major players like Blackstone striking deals and KKR and Apollo acquiring insurers outright. These private equity firms are now controlling retirement savings, pushing insurers towards riskier assets such as private credit loans. This shift is a growing concern for regulators and executives, who warn that it exposes policyholders to potentially dangerous market shifts and a greater risk profile than before 2008, according to A.M. Best.
US life insurers currently hold $685 billion in riskier assets, which accounts for 18% of their fixed-income portfolios. This move towards private credit investments, which include loans backed by aircraft leases, equipment finance, and student loans, creates significant valuation challenges and liquidity concerns. Insurers have adopted these strategies to offer more competitive annuity rates, but risk managers are increasingly worried about the complexity and opacity of these holdings. Moody's reported that private illiquid bond holdings across the US life insurance industry reached $807 billion at year-end 2025, an increase of $122 billion in just one year.
Affiliated transactions are a particular area of concern. For example, Apollo's Athene holds 18% of US Life Group assets from its affiliates, while KKR's Global Atlantic also engages in such practices. The Chicago Fed estimates that life insurer investments in private credit reached $849 billion in 2024, more than double the amount in 2014, and close to half of the $1.8 trillion private credit sector. This growth, especially in the indexed annuity market, is heavily driven by private equity-owned life insurers who have better access to these investments through affiliated issuers. Some experts warn of a potential "doom loop" if concerns about the market lead retirees to surrender their annuities, causing more private credit distress and further withdrawals.
Regulators have flagged the opacity of the underlying assets as a growing concern, especially with the US retail annuity sales reaching a record $461 billion in 2025. The fixed indexed annuity (FIA) segment alone accounted for $127.9 billion in sales in 2025. A March 2026 analysis found that roughly a fifth of investments held by some asset management (AAM)-affiliated insurers consist of loans made to affiliated funds. The private market's opaque nature makes it difficult to assess the true risk, with some analysts noting that the lack of transparency makes it impossible to evaluate vulnerability. However, some in the industry argue that insurers invest in very safe private assets, primarily private investment-grade credit, to generate high-quality yield and retirement income.
Nevertheless, A.M. Best's report highlights that the investment portfolios supporting annuities now carry thinner financial cushions and rely more on complex structures like private credit and reinsurance. Individual annuity policies now represent over 36% of total life and annuity reserves, up from 32% before the financial crisis. Concerns about cross-border reinsurance increasing operational complexity and reducing transparency have also been raised. Andrew Milgram, managing partner at Marblegate Asset Management, describes the exposure retirees have through annuities to private credit as a "big problem," emphasizing the interconnected risks.
