CounterPunch Exclusives

CounterPunch Exclusives

You Bet Your Life (Insurance): Private Equity Comes For Your Annuity

There are signs that private equity’s destabilizing role in the insurance industry is growing.

In 2020 and 2021 (as we wrote at the time), large private equity (PE) firms were buying up life insurance companies to gain control of their huge annuity assets. Insurance companies had invested the premium payments for clients’ retirement savings in safe, publicly traded and highly liquid stocks and bonds. But years of low interest rates crippled this asset business, and the returns on these investments were no longer adequate to fund the required annuity payments.

As a result, insurance companies were anxious to unload their annuity portfolios. Large PE firms saw an opportunity to quickly increase their assets under management by acquiring or taking control of managing these annuity assets.

An annuity is a long-term contract with an insurance company that provides retirement income to individuals, who pay a premium that is invested by the insurance company and grows tax-deferred. When the individual grows old, they receive regular payments that fund their retirement. Annuities are attractive to private equity firms because they are a source of ‘permanent capital’ that replenishes as premium payments flow in and offset outflows to recipients of annuity payments. PE firms were confident they could increase returns on these assets and make them profitable by investing some of these annuity assets in illiquid private market equity buyout and credit funds. Smaller PE firms also got involved by buying up smaller insurance companies.

At the end of 2020, PE firms controlled $471 billion (nearly 10 percent) of annuity assets and had acquired 50 of the 400 annuity companies in the US. Apollo, which had a majority stake in Athene, the life insurance company it had founded in 2009, acquired all of its annuity assets In 2021 — worth about $194 billion at the time. Apollo said that it planned to invest about 5 percent of Athene’s funds in riskier, fee-paying alternative assets, including its own PE and debt funds. In 2021, Blackstone paid $2.2 billion to American International Group (AIG) for a 9.9 percent stake in its life insurance and annuities unit and gained control of the investment decision of much of its portfolio of annuity assets. Blackstone also struck a deal in 2021 to buy a life insurance unit of Allstate Corporation. As a result of these transactions, Blackstone’s insurance assets under management reached $150 billion by the end of 2021. The insurance assets it controls accounted for a third of Blackstone’s overall assets under management that year. In July 2020, KKR announced it was buying the life insurance and retirement income company Global Atlantic Financial Group for $4.4 billion and taking over management of about $70 billion of Global Atlantic’s assets. The deal raised the assets KKR managed on behalf of insurance companies from about $26 billion to more than $96 billion, and increased KKR’s total assets under management by 30 percent.

Fast forward to the fall of 2025, and we see that this trend towards investing in private assets is intensifying. According to Mark Friedman of PwC, there has been a seismic shift; he reports that a recent survey found close to three-quarters of insurers now own private assets, and a second survey of 410 insurance companies found that 91 percent planned to increase their allocations to private markets over the next two years.

Indeed, Apollo, Blackstone, KKR and their rivals have loaded up their own annuity businesses with private credit investments. And clients holding annuity contracts have found themselves with increasingly risky........

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