Archives: Articles

IssueM Articles

How Leveraged Are Bermuda Triangle Life Insurers?

Posted on September 1, 2026 by -

Life insurers used to brag about the size of their surpluses, aka their capital buffers against loss. Today, asset manager-led life insurers in the Bermuda Triangle are more likely to brag about their “capital efficiency” and intention to run “capital-light” companies.

That’s Wall Street-speak for more leverage. Leverage—borrowing to invest—is a normal part of finance. Insurance is an inherently leveraged business, floating on the savings of its customers. Used successfully, leverage can multiply returns on equity capital. But, in a financial crisis, if the borrowed money is secured by collateral that’s also borrowed, and whose value is subject to market volatility, leverage can multiply the risk of loss or insolvency.

Bermuda Triangle companies—annuity-issuing life insurers with affiliated alternative asset managers and offshore reinsurers—tend to carry a lot of leverage. Collectively, these powerful combinations have leveraged hundreds of billions of dollars in annuity sales revenue and borrowed billions more from institutional investors, primarily to finance the asset managers’ high-yield private-credit loans to already-leveraged firms.

Their degrees of leverage are hard to measure. The life insurers’ annuity contracts are complex. The asset managers’ loans to middle-market companies are by nature high-risk, complex, illiquid and bespoke. Simultaneously serving as borrowers and lenders, affiliated life insurers and asset managers can at times control both sides of large transactions. The operations of their holding companies, which straddle state, federal and international jurisdictions, have both worried and frustrated regulators and watchdogs. They see the growth of the strategy as a potential threat to the stability of the global financial system.

This month, as part of RIJ’s ongoing effort to shine light on the inner clockwork of the three-way Bermuda Triangle strategy, we identify their obvious and obscure sources of leverage.

Sources of leverage aka capital efficiency

Balance sheet leverage. Insurance is itself is a highly leveraged business. When a life insurer borrows sells fixed deferred annuities (the product of choice for Bermuda Triangle companies), it in effect borrows the savings of risk-averse older Americans. The life insurer takes their five- or six-figure premiums, buys and holds mainly investment-grade bonds, and earns a spread—the difference between what it promised annuity contract owners and what it earns on its purchased assets.

The spread might only be 2%, but the insurer earns upwards of 10% to 15% in return on equity, thanks to leverage. Of $100 billion in reserves that a life insurer invests, for example, its surplus might be only $5 billion. A 2% spread on the invested assets means a $2 billion gain on equity capital of $5 billion. That’s a 40% gross return, which expenses might reduce by two-thirds or more. A 2023 Federal Reserve research paper (see table at right) showed that, from 2010 to 2021, life insurers with “shadow banking” or private credit activities—RIJ’s “Bermuda Triangle”—ran consistently higher average leverage levels  than life insurers without such businesses.

Leverage levels at asset-manager-led life insurers have been going up. According to the Federal Insurance Office’s September 2025 Annual Report on the Insurance Industry, “The trend in investment exposure and surplus exposure—with potentially heightened insurers’ exposure to certain risks that can stem from a downward spiral in asset prices, increased issuer leverage, rising defaults, and funding risks—continues to be monitored by FIO. “The asset leverage for privately-owned insurers is somewhat higher” than the insurance industry average, according to ALIRT.

Capital-efficient products. As insurance products go, fixed deferred annuities, and especially fixed indexed annuities (FIAs), are priced for demanding relatively little life insurer capital.

Sold as safe investments and not life-contingent income, and usually running for terms of three to 10 years, fixed deferred annuities don’t carry the decades-long exposure to changing longevity or mortality rates that, say, a traditional immediate income annuity or a life insurance policy would. (Editor’s note: Much of the media seems to confuse deferred annuities with income annuities.)

In the case of FIAs, the contract owners themselves finance an at-the-money call option on an equity index or hybrid index. They use roughly the interest they might have earned on a fixed-rate annuity, adding to this “options budget” by selling rights to index returns above a certain level. Through their management of the volatility controls inside bespoke indices, FIA issuers can put governors on the returns of the index and make their returns more consistent.

When the risk of the liability is under control, the insurer conserves capital, which implicitly raises leverage levels. That capital can be used to increase annuity sales and to help finance bundles of high-yield loans. Purchasers of FIAs, especially those who reach for the highest-yielding contracts, presumably like to see their insurers reaching for yield—they’re banking on the fixed annuities’ no-loss-of-principal guarantees to keep them whole.

Reinsurance. This may be the most overlooked source of leverage in the Bermuda Triangle.

Traditionally, life insurers reduced their leverage ratios by selling books of capital-intensive business to reinsurers to “free up capital.” Many still do. But asset manager-led life/annuity companies have flipped that logic. When they’re not buying blocks of distressed annuity or life insurance business from older life insurers, they’re using reinsurance to reduce the capital requirements triggered by new annuity sales or riskier investments.

From Foley-Fisher et al, April 2023.

 

They typically do this in partnership with an affiliated reinsurer—another unit of the same holding company—in Bermuda or the Cayman Islands. The offshore reinsurer can put up the capital to back new sales and assume the risks associated with high-yield lending. Those jurisdictions may require less capital than the U.S. regulators require. Moreover, the Bermuda reinsurer can lever “sidecars”—financed by international institutional investors—for some or most of its capital. That’s another form of leverage.

“Privately-owned life insurers reported much higher reinsurance leverage (both affiliated and unaffiliated) than the life insurance industry in total, the insurance analysts at ALIRT reported in July of this year. “This reflects the greater use of reinsurance among privately-owned carriers as well as the portion of capital held at foreign reinsurance entities in some cases.”

“The vast majority of reserves ceded are covering liabilities for indexed and fixed annuities,” said Best’s Special Report, “Big Year of Growth for Life/Annuity Sidecar-Like Activity in 2025.” “As a result of managing strong premium growth through reinsurance, the individual annuity composite has steadily seen its reinsurance leverage double since 2019. In addition, overall surplus relief of nearly 11% in 2025 was double that of the previous year.”

According to recent Bank of International Settlements research, “By 2023, US life insurers had ceded $2.1 trillion in reserves, up from $500 billion in 2017, representing 25% of their total assets. Offshore reinsurers accounted for 40% of these risks, up from 14% in 2017, with some of this activity occurring in jurisdictions with less stringent regulatory frameworks.”

“PE-influenced reinsurers… account for about half of the assets of all long-term reinsurers in Bermuda,” according to a 2023 International Monetary Fund study. “As of the latest available data in 2021, Bermuda long-term reinsurance assets, a proxy for life reinsurance, grew to more than $1 trillion, about 4% of total life insurance assets globally, doubling their share when compared to the previous four years.”

‘Embedded’ leverage. Life insurers can get exposure to higher-yielding, below-investment grade assets, without a proportionate increase in their capital requirements, by financing investment-grade senior tranches of collateralized loan obligations (CLOs) created or managed by their affiliated asset managers. In effect, the financial engineering process of securitization lets them hold riskier assets without employing as much capital.

The International Monetary Fund calls this “embedded leverage.” According to the IMF, “The National Association of Insurance Commissioners (NAIC) has found that an insurer that owns all the tranches of a collateralized loan obligation with underlying assets of B-rated loans would have a substantial beneficial regulatory capital arbitrage compared to holding directly the underlying B-rated loans based on existing risk-based capital (RBC) calculations for life insurers. NAIC is proposing to address this regulatory capital arbitrage by adding additional NAIC designation categories and relevant RBC factors.”

“An insurer in the U.S. or Bermuda that packages its middle-market loan holdings into a CLO and invests in the entire CLO capital stack could reduce its capital charge by a factor of 10… Insurers holding a portfolio of B-rated loans can cut their risk-based capital charges by two-thirds if they package those loans into a CLO and purchase the entire CLO capital stack,” according to a March 21, 2025, FED Notes bulletin entitled, “Life Insurers’ Role in the Intermediation Chain of Public and Private Credit to Risky Firms.”

The life insurer earns a rate of interest that’s higher than comparably-rated public-market securities, while the asset manager is in a position to earn management fees (CLOs are, or can be, actively managed) and, if it has an interest in the risky equity tranche of the CLO, a return multiplied by all the borrowed money in the CLO stack.

Borrowings from Federal Home Loan Banks. The FHLBs are a system of 11 regionally-based government-sponsored banks providing liquidity to financial institutions to promote housing and community initiatives. Insurers can borrow from the FHLB if they engage in mortgage lending (or hold mortgage-backed securities) and purchase FHLB stock. To receive advances from the FHLB, they post collateral, sometimes using the money they borrowed by issuing funding agreement-backed notes or FABNs (see below).

A June 2026 Best’s Special Report, “Funding Agreements Drive FHLB Borrowings for the L/A Industry in 2025,” states that borrowings in the form of funding agreements totaled $153 billion in 2025, compared with $136 billion in the previous year, as annuity writers have been able to leverage the lower cost of borrowing from the FHLBs and gain a favorable spread on investments. Although the FHLBs provide an inexpensive short-term financing option potentially used to increase investment income, an insurer may be exposed to credit risk, collateral risk and market risk.

According to the report, borrowing capacity grew at a faster rate than borrowings in 2025, increasing by 18%, again heavily driven by annuity writers. “Borrowing capacity is still broadly available, although it is somewhat more limited than in 2019, before the more recent annuity sales boom amid private capital heavily entering the life/annuity industry. Two-thirds of companies used less than half of their available capacity in 2025, which is up from 62% in 2019; however, a notably higher share of companies have outstanding borrowings today as compared with 2019.”

The report added, “Since FHLB funding agreement borrowers are predominantly companies that sell annuities and spread-play business, the investment profile of these borrowers closely mirrors that of the individual annuity composite in asset classes such as private placements and affiliated and high-risk investments, as well as bond yields.”

For example, Delaware Life, which is currently under SEC investigation for understating its degree of lending to affiliated companies, reported in its latest statutory filing that $6.4 billion of its assets are pledged as collateral for its FHLB loans. It was part of the $10.6 billion in “restricted assets” that the company can’t readily liquidate. Delaware Life’s surplus, by comparison, is just $3.9 billion.

The Congressional Research Service, in a March 27, 2025 report to Congress, didn’t comment directly on FHLB loans to life/annuity companies, but noted, “Because Congress created FHLBs to facilitate mortgage market liquidity, public policy discussions often consider the system’s effectiveness at achieving the congressional intent.

“One concern is that many member institutions eligible to join the FHLB system may not be principally engaged in residential mortgage finance, calling into question the extent to which FHLB advances subsidize the funding of mortgages or the funding of member institutions’ asset portfolios in general.” [Emphasis added.]

Funding Agreement Backed Notes. The 1994 invention of “funding agreement backed notes” has been attributed to former SunAmerica CEO and later Athene CEO Jim Belardi. Life insurers can use funding agreements, which are similar to guaranteed investment contracts (GICs), to borrow money in the wholesale money markets. The life insurer sends a funding agreement to a special purpose vehicle (SPV) it creates. The SPV sells notes or securities—interest-paying IOUs—to institutional investors, and passes the proceeds of the sale back to the life insurer.

These borrowings, which are in effect secured by the same general account assets that back the insurer’s obligations to annuity owners, can be used to secure the life insurer’s FHLB advances. The life insurer’s obligations to FABN lenders are said to be “pari passu”—on equal footing—with the insurer’s obligations to contract owners and policyholders.

The chart below, from a 2025 presentation by the American Council of Life Insurers, shows the steady increase in FABN borrowing by life insurers.

FABNs give an insurer a new deposit-like asset and a new insurance liability without changing its surplus. They can, however, increase a carrier’s economic leverage. The table below shows how new FABN debt can change surplus ratios.

Source: ChatGPT and RIJ.

 

“A highly leveraged insurer with well-matched, liquid assets and widely staggered fixed-term maturities may be manageable,” said a NAIC primer on FABNs. “A rapidly growing insurer funding illiquid private-credit assets with short or concentrated FABNs is considerably more vulnerable. So the appropriate conclusion is: the growth is a legitimate regulatory concern and potentially a systemic-risk signal, especially if it is not visible in conventional leverage statistics. But the danger depends on the structure and use of the funding, not on issuance volume alone.”

The NAIC doesn’t have complete data on the amount of FABN borrowing by life insurers, according to the primer: “Statutory reporting of FABNs by insurers does not exist, making it difficult to accurately assess overall exposure levels and the appropriate matching of assets to liabilities (i.e., whether the duration of the funding agreement matches that of the FABNs issued).

“To address this transparency risk, the NAIC has proposed standards for additional disclosures in insurer annual statement filings for funding agreements that back FABNs. Currently, the only required reporting is the amount of funding agreements issued in aggregate for all purposes, with disclosure of funding agreements issued in connection with FHLB advances.”

Conclusion

There’s a lot of leverage in the Bermuda Triangle. Life/annuity companies in effect borrow by selling annuity contracts, by issuing FABN notes, and by receiving advances from Federal Home Loan Banks. The insurers then finance their asset managers’ private credit operations while money from institutional investors helps capitalize their affiliated reinsurers.

Leverage can be good and bad. On the one hand, it multiplies return on equity. On the other hand, it allows investment companies to take big financial risks with other people’s money. The Bermuda Triangle scares certain regulators and watchdogs—the Federal Reserve, the IMF, the FIO, the BIS, and the NAIC—because its business model is opaque and the securities that its practitioners use as loan collateral can be illiquid, hard to rate and hard to price. Bermuda Triangle companies are good at turning cash into paper assets. But in a crisis, will they be able to turn that paper back into cash?

The private nature of private lending, coupled with fragmented regulation, is bound to make it hard to know who is on the hook to provide the cash and how much money they owe.

“The migration of credit creation and corporate control toward private intermediaries redistributes and reshapes risk rather than eliminating it,” said a recent paper from the CFA Institute’s Research and Policy Center. “As these intermediaries scale, the issue is no longer only leverage and liquidity. It is also accountability—who ensures valuation integrity and transparency—and how standards and supervisory frameworks adapt to protect investors and the stability of the system.”

© 2026 RIJ Publishing LLC. All rights reserved.

AM Best marks growth of offshore reinsurance

Posted on August 31, 2026 by -

AM Best identifies strength, weakness and growth of offshore reinsurance

Strong annuity product growth, higher interest rates, and offshore transactions that take advantage of differing capital regimes is driving U.S. life/annuity companies to cede out business and increase their level of reinsurance leverage, according to the latest Best’s Market Segment Report.

The report, “Global Life/Annuity Reinsurers Remained Poised for Steady Growth,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo.

“Persistent and intensifying competition” is pressuring asset-manager-led life/annuity companies in particular to grow returns, AM Best said. “Asset-intensive reinsurance” (protection from asset underperformance, not from liability shocks) can enhance profitability by providing surplus relief.

Bermuda and, to a lesser extent, the Cayman Islands, offer opportunities for surplus relief through regulatory arbitrage. Offshore L/A reinsurance has averaged 31% annual growth over the past 10 years. Pure life-side product reinsurance is a more mature marketplace but still sees a steady growth rate of about 4% a year. Many companies have placed their focus on counterparty risk.

“The treatment of required capital and reserves is often less stringent than for reinsurers domiciled onshore in the United States. There is increased recoverability risk in some cases due to a lack of collateralization in some jurisdictions,” said Edward Kohlberg, director, AM Best, in a release.

AM Best noted “pockets of concern that the level of excess capitalization may be insufficient to support claims in stress scenarios”—meaning that the reinsurers, having provided surplus relief to the ceding companies, might turn out not have enough capital to cover the ceding companies’ losses in a big asset price crash.

The amount of reserve credit taken and funds withheld on U.S. cedents’ balance sheets has been steadily increasing as a percentage of gross reserve credits taken, the release said. At year-end 2025, 41% of ~$1.61 trillion in reserve credits taken belonged to reinsurers, up from about 21% at year-end 2016.

Sidecars can help. “Sidecars have also gained prominence in the L/A space,” said Lou Silvers, senior financial analyst, AM Best. “These are reinsurance affiliated or non-affiliated entities that draw on capital from third-party limited investors and can provide incremental just-in-time capital to execute larger deals when opportunity arises and earn additional fees for the general partner.”

Asset manager-led insurers drive offshore reinsurance growth: AM Best

The amount of annuity reserves ceded offshore continued to increase in 2025 and now represent more than half of ceded annuity reserves as companies manage risk-based capitalization levels amid increased market competitiveness, according to a new AM Best report.

The Best’s Special Report, “Unaffiliated Offshore Reinsurance Deals Drive Asset-Intensive Reinsurance Market in 2025,” is a part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo.

Takeaways from the report include:

  • Unaffiliated reinsurance deals outpaced affiliated deals in 2025 for the first time in three years, with the 10 largest unaffiliated reinsurance transactions in 2025 totaling over $107 billion, greatly surpassing the $35 billion in 2024.
  • AM Best notes that cross-border reinsurance introduces operational complexity and opacity. While the use of offshore reinsurance helps manage risk-based capitalization, reinsurance dependence, quality and the appropriateness of reinsurance programs can have negative impacts to the overall balance sheet strength assessment in AM Best’s rating analysis.
  • Although reinsurance deals with offshore entities often complicate accounting, AM Best captures these risks at the consolidated level by looking at the ceding and affiliated captive reinsurance company in its global Best’s Capital Adequacy Ratio (BCAR) calculations.

The asset-intensive reinsurance market remains competitive as annuity growth slows at primary insurers, leading to steadily increasing reinsurance leverage for the life/annuity segment. In this report, AM Best states that offshore reinsurance accounted for nearly 56% of ceded annuity reserves, including modified coinsurance (modco) reserves.

While Bermuda continues to be the dominant offshore domicile, the Cayman Islands increased its share of the market in 2025, heavily driven by a few recently established sidecars.

The dramatic increase in ceded reserves to offshore affiliates has been driven largely by private equity/asset manager-owned companies.

“Private equity/asset manager-owned insurers generally lean more into this strategy, as these companies account for nearly half of reserves ceded to offshore affiliates, but account for only one-quarter of total reserves ceded,” said Jason Hopper, associate director, Industry Research and Analytics, AM Best.

A Flurry of Activity in the Triangle

Posted on August 31, 2026 by -

Two regional banks pause sales of Delaware Life annuities

Truist Financial Corp. and Fifth Third Bancorp. have paused distribution of Delaware Life products while Mark Walter responds to an SEC investigation, Bloomberg has reported, based on confidential interviews.

“The banks are tapping the brakes on their role as sale channels for Delaware Life Insurance Co. amid a US probe of Walter’s sprawling business empire that has cast a shadow over credit ratings for the provider of annuities and life insurance,” Bloomberg reported.

The lenders had made the insurer’s products available through branches or adviser networks with the underlying risk of the insurance and market borne by the insurer itself.

Delaware Life and the smaller Clear Spring Life (formerly Guggenheim Life) are controlled by Walter’s holding company, TWG Global. The insurers revealed in June that they had more than $20 billion of affiliated loans on their books that were not marked as such.

TWG said in a statement earlier this week that it’s working to resolve any regulatory concerns and that there “has been no fraud. No one has been harmed, and no one has claimed they were harmed.”

While new sales of products are paused, the insurer is in contact with client advisers at both institutions, one of the people said. Representatives for Truist and Fifth Third declined to comment. “Our communications with key distribution partners remain open and cooperative,” a spokesperson for Delaware Life told Bloomberg.

Malibu Life partners with Legacy Marketing to launch its first FIAs

Malibu Life USA, which is controlled by Third Point Investors, has tapped Legacy Marketing Group as its distribution partner for Malibu’s new PillarMark and SpireMark FIAs. Both products are expected to launch this month.

The products will be underwritten by Texas-domiciled TruSpire Retirement Insurance Company. TruSpire, which Malibu Life parent Malibu Life Holdings Ltd. acquired this year, is expected to serve as Malibu Life’s direct U.S. annuity origination platform. The group has a Cayman Islands reinsurer, Malibu Life Re.

The force behind Malibu Life is Daniel S. Loeb, the billionaire CEO of asset manager Third Point Investors Ltd. As RIJ reported last November:

“In little over a year, Loeb and his team have:

  • Turned their Hudson Yards-based closed-end fund into a London-listed insurance holding company
  • Bought Birch Grove, an $8 billion private-credit investment shop
  • Established Malibu Life Re, a reinsurer in the Cayman Islands
  • Acquired a Texas-domiciled U.S. life insurer
  • Hired a veteran Cayman reinsurance executive to run Malibu Life
  • Agreed to provide “flow reinsurance” to an unnamed “blue-chip annuity platform”
  • Secured equity commitments from Voya and its ReliaStar unit
  • Prepared to issue a fixed deferred annuity in the U.S. in the first half of 2026”

PillarMark has a lifetime income rider with the “potential for increasing payouts over time,” while SpireMark is a fee-based solution for RIA clients seeking “flexible income with early income opportunities,” according to a release. Both will feature “Allocation Blueprints,” a planning tool.

Sun Life and Wilton Re in asset management/reinsurance deal

Sun Life Financial Inc. and Wilton Re have established a strategic reinsurance and asset-management partnership in a deal expected to deploy $900 million in capital, according to a release.

Of the initial deployment of $900 million, the companies said they will each commit about a third of the initial deployment of $900 million. Windsor Life Re will reinsure from Wilton Re an in-force block of approximately $1.7 billion, it said.

Wilton Re will cede future business on a quota share basis to Windsor Life Re, which is anticipated to reach $10 billion in assets.

The partnership ties Wilton Re’s liability management experience with Sun Life’s insurance and asset management capabilities, the companies said in a joint statement.

Wilton Re will form Windsor Life Re, a reinsurer domiciled in the United States and Bermuda that supports growth in its Wilton Re’s U.S. in-force life and annuity block generation, the company said in the statement.

Wilton Re has experience in in-force block acquisitions, as well as deal-sourcing and underwriting expertise. Sun Life’s SLC Management will be the lead asset manager for Wilton Life Re’s investments. The partnership is expected to launch in the first half of 2027.

Cayman Islands seeks NAIC ‘qualified jurisdiction’ status

The National Association of Insurance Commissioners said it received an application for Qualified Jurisdiction status from the Cayman Islands Monetary Authority.

The application, delivered Aug. 7 and currently moving through the NAIC’s committee process, is limited at this time to Class D insurers working in nonlife property/casualty business, the NAIC said.

But in April, the Cayman Islands announced it would seek Qualified Jurisdiction status for its reinsurance sector, which would formally recognize the Cayman Islands’ reinsurance regulatory framework within the NAIC process.

Receiving the distinction would allow U.S. insurers to get credit for reinsurance from a non-U.S.-domiciled company, according to NAIC documents. The receipt of qualified jurisdiction status would also lower reinsurance collateral requirements, NAIC documents said.

Pacific Life Re announces flow reinsurance deal in Japan

Pacific Life Re, the global life reinsurance business of Pacific Life, has completed its third asset-intensive flow reinsurance transaction in Japan, according to a release. The transaction follows the company’s prior block transactions and two flow transactions in Japan.

The deal, executed with a Japanese life insurer, involved the reinsurance of whole life liabilities through another new flow counterparty. The flow format helps insurers manage capital and risk exposures, while also enhancing the competitiveness of their product offerings in the market, according to a release.

Hildene’s credit ratings posted ahead of SILAC purchase

With Hildene Holding’s acquisition of SILAC Inc. still pending, Hildene Holdings and Hildene Capital Management, LLC (HCM), have received issuer ratings of BBB and senior secured debt ratings of A- from the ratings agency, KBRA.

“The ratings are supported by Hildene’s growing scale and platform diversification across multiple segments of structured credit, asset-based finance, and insurance, underpinned by management’s expertise in complex securitized products and structured finance investing, according to a KBRA release.

KBRA said that the acquisition of SILAC, Inc., parent of SILAC Insurance Company, a provider of fixed and fixed indexed annuity products, will diversify Hildene’s AUM toward longer-duration assets.

As co-borrowers, HCM and Hildene Holding Company, LLC, are seeking a $150 million senior secured delayed draw credit facility with a three-year maturity and two 12-month extension options. Approximately $100 million will be used to fund a portion of the ~$550 million SILAC acquisition.

Athene’s financial strength affirmed by AM Best

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of the members of Athene Group (Athene).

Athene is the consolidation of the organization’s U.S. operating companies, along with its affiliated reinsurance companies domiciled in Bermuda.

AM Best also affirmed the Long-Term ICR of “a-” (Excellent) of Athene Holding Ltd. (Delaware), the holding company for the U.S. and Bermuda operations, and its AM Best has Long-Term Issue Credit Ratings (Long-Term IR) and the indicative Long-Term IRs. All the Credit Ratings had a stable outlook.

AM Best assessed Athene’s balance sheet, its operating performance, business profile and enterprise risk management, as very strong or strong. The agency viewed Athene’s consolidated risk-adjusted capitalization as strongest, based on Best’s Capital Adequacy Ratio (BCAR).

“Athene has demonstrated its ability to access capital markets and maintains additional access to capital and liquidity through a liquidity facility, a revolving credit facility and the Federal Home Loan Bank, by its borrowing capacity and a shelf registration statement, as well as uncalled capital commitments from Athene Co-Invest Reinsurance Affiliates investors,” AM Best said.

© 2026 RIJ Publishing LLC. All rights reserved.

Mark Walter Brings Eyeballs to the Bermuda Triangle (I Hope)

Posted on August 30, 2026 by -

When I heard about the SEC investigation of Mark Walter, Guggenheim Partners, Delaware Life and Clear Spring Life, I thought:

Maybe this will bring some overdue attention to the regulatory arbitrage that RIJ calls the Bermuda Triangle strategy. If it takes the reflected glory of the World Series Champion Los Angeles Dodgers to focus the nation’s attention on that strategy—of financing high-maintenance, high-yield, risky loans with low-maintenance, low-yield retirement savings—into sensational news, so be it.

Subsequent thoughts, in no particular order:

  • Isn’t lending to affiliates why “alternative asset managers” (aka buyout firms, aka private or private credit managers, former ‘Barbarians-at-the-Gate’) like Apollo, KKR, and others buy (or start or partner with) life insurers? Isn’t that why the life insurers sell fixed deferred annuities? Isn’t that why they set up affiliated reinsurers in Bermuda or the Cayman Islands to tamp down their capital requirements and finance their distribution expenses?
  • Didn’t Mark Walter only a month ago, in a ceremony in the former Rose Garden, break tradition to give Donald Trump a jewel-encrusted World Series ring along with the honorary name-jersey that sports champions customarily give presidents?
  • Didn’t the SEC investigate Walter for self-dealing back in 2018? Hadn’t the Wall Street Journal reported that he used life insurer money to buy an $85 million mansion (that the Pacific Palisades fire later destroyed)?
  • Were insurance regulators in Delaware Life and Clear Spring Life’s home state of Delaware on top of the affiliated loans? If not, why not?

For anyone new to the Walter/Delaware Life/Dodgers drama, the Wall Street Journal and other media outlets recently revealed that a whistleblower had told federal regulators that Walter’s life/annuity companies had made many more affiliated loans than it had reported on its statutory filings.

A federal investigation led to a grand jury and a subpoena earlier this year of the records of Delaware Life and Clear Spring. It turned out that not 3% but 42% of Delaware Life’s assets were invested in affiliated companies, and that the total value of affiliated transactions was $17 billion more than reported.

From Delaware Life’s latest statutory filing, p.7.2

According to its 2Q2026 statutory filing, Delaware Life had assets (excluding $18.5 billion in separate accounts) of $46.6 billion and a surplus of $3.9 billion for a middle-of-the-industry surplus ratio of about 8%. At $17 billion, transactions whose value depended on the performance of affiliated private credit assets—illiquid assets of potentially questionable value—were therefore worth more than its surplus.

Walter has since taken initial steps to bring down the percentage of affiliated assets to 39%, and then to 26%. In a slide deck that Delaware Life shared during its recent Second Quarter 2026 Investor Day presentation, the company described its Affiliated Reduction Plan & Control Remediation Plan Update. There’s a brief discussion there of what that entails (see below).

But this investigation, and the reporting on it, is in danger of missing the bigger picture. As Valmark CEO Larry Rybka spells out clearly in his white paper in today’s issue of RIJ, as does this new research paper from Yale, the ownership of life insurers and reinsurers by alt-asset managers can easily, if abused and not properly regulated, become what in common parlance we used to call a racket.

Even if an alt-asset-manager-led life insurer made only unaffiliated loans, the real problem—affiliations of life insurers and asset managers for the purpose of taking risks with retirement savings—would still exist. The conflict occurs at the institutional level, not just at the loan level. The strategy’s practitioners see synergies, not conflicts. To use tech jargon, the conflict is a feature not a bug.

This incident is also revealing the hidden affiliations between the owners of insurance holding companies. The Wall Street Journal has shed light on ties between Mark Walter and Security Benefit’s Todd Boehly, and between Sammons and Guggenheim Partners (though Sammons claims to have diversified its investment management), and between Walter and Mubadala, the Abu Dhabi sovereign wealth fund.

The Journal reported that in April 2025, Walter’s conglomerate, TWG Global, had announced that Mubadala, the Abu Dhabi fund, would help it raise $10 billion in new equity. Mubadala is an investor in Aquarian Holdings, a $27 billion asset manager that bought Investors Heritage Life in 2018, then Hudson Life, then Somerset Re, then established Neptune Reinsurance, then, in 2025, bought Brighthouse, formerly MetLife’s retail annuity business.

Federal Reserve economists have been raising flags about this phenomenon since the early 2010s, identifying private credit as “shadow banking” and offshore reinsurance “as shadow insurance.” At least six years ago, other Fed economists identified the triple play of affiliated asset managers, life insurers and reinsurers. RIJ has been writing about the phenomenon since 2020. For the latest research on these structures, see the research cited in RIJ today by Eileen Appelbaum of the Center for Economic Policy and Research.

Maybe the Dodgers angle will finally bring this complex topic, and all its implications about wealth concentration and diluted financial regulation, to the level of national debate.

© 2026 RIJ Publishing LLC. All rights reserved.

MYGAs Were the Top-Selling Annuity in 2Q2026

Posted on August 29, 2026 by -

This quarter marked some substantial sales improvements from last quarter. The fall of indexed annuity sales in 2Q2026 was tough, but it didn’t have quite the same sting as the drop in multi-year guaranteed annuity (MYGA) sales for the quarter.

Every line of business experienced an increase in sales, relative to 1Q2026. Indexed annuity and MYGA volumes were down, however, when compared to this quarter, last year. There were 44 negative rate adjustments during quarter two, compared to 112 at this time last year.

Multi-year guaranteed annuities, fixed annuities and indexed annuities’ sales were directly impacted with those negative rate adjustments. The end result? Forty-one percent of annuity participants experienced declines over 1Q2026 sales, and 39% of participants experienced declines over 2Q2025. Overall, annuity sales were up over 13% from last quarter, but down over 2% from this time in 2025. We anticipate that annuity sales will fall short of 2025 levels this year.

Deferred annuities experienced much of the same, relative to all annuities. Rates are relatively good, but that isn’t enough to get agents off the beaches and into their offices to sell more annuities. The summer is always a challenging quarter, as far as sales go.

That said, sales of all deferred annuities increased nearly 13% from last quarter but dropped by nearly 3% when compared to this time, last year. The MYGA line of business was up nearly 17% from 1Q2026—and that’s great. However, sales were also down on these commoditized products- over 18% from 2Q2025.

One-year guarantee fixed annuities increased over 12% from last quarter and over 23% from this time, last year. That said, it is easy to beat a benchmark that is already low to begin with. Indexed annuities increased sales more than 16% from the prior quarter, but down nearly 4% from this time last year. Next quarter should be an improvement.

Structured annuities (Registered Indexed-Linked Annuities, or RILAs) shined this quarter with an increase in sales exceeding 8% from last quarter. Those offering the newest type of deferred annuity are killing it, and it shows; sales were up over 21% from 2Q2025. There is no questioning that structured annuity sales will set another record in 2026.

And variable annuities…they are steadily on the rise. Sales levels were up nearly 5% from last quarter and up more than 16% versus this period, last year. Income annuities of the immediate kind had a great quarter with a 28% increase from 1Q2026 and an 8% thrust forward from this period, one year ago.

Deferred income annuities’ growth would be remarkable if sales weren’t so low to begin with. The 55% increase in sales of DIAs from last quarter is a roadmap for others to follow. With sales up 17% from 2Q2025, it isn’t a bad time to be selling these guaranteed lifetime income instruments.

Although rates on MYGAs have not been as attractive as they were a few years ago, they  improved from last quarter, which set MYGAs up for a “win.” Sales levels improved nearly 17% from the previous quarter, although MYGA sales were down more than 18% from this time in 2025. Fifty percent of the top ten companies experienced challenging MYGA sales, relative to 1Q2026.

As for sales compared to this time last year, the biggest company in annuity sales increased its own sales nearly 150% from the prior 2Q, which softened the blow on the sales declines from this time in 2025. While it is tough to feel confident in any sales forecasting when there is talk of inflation, changing the Fed Funds Rate, the increasing cost of oil—it all looks like MYGA sales will come up short this year, despite continued lack of competitiveness against Certificate of Deposit (CD) rates.

Fixed annuities with a one-year guaranteed rate had some positive momentum with their sales in second quarter. However, we are talking about a product line that cannot break $600 million in a quarter. Ultimately, sales of traditional fixed annuities were up more than 12% from last quarter and up more than 23% from this same quarter, one year ago.

Having the top carrier in the space increase this quarters’ sales well into the triple digits (from this time last year) certainly helps when other companies are having a tough time closing sales due to the rate environment. We still anticipate that this product line will have an increase in sales for 2026, topping the previous year’s levels modestly.

Fixed indexed annuities

Sales of indexed annuities haven’t been this high for a couple of quarters. An increase of more than 16% left the product line sitting pretty, but then sales dropped almost 4% from the same period, a year prior.

When evaluating the top ten best-selling indexed annuity companies, one cannot help but notice the huge sales increase that the top seller had over 1Q2026. However, a comparison against indexed annuity sales last year illustrates that 60% of the top ten players had mostly double-digit losses. We are anticipating that indexed annuity sales will be down considerably for all of 2026.

Structured and traditional variable annuities

The darling of the deferred annuity market is still chugging along, making impressive increases in sales levels, while still maturing as a product line. Impressive rates on structured annuities have helped buoy these products to increases of 8% over 1Q2026 and a huge leap of more than 21% when compared to this time, last year.

When evaluating how structured annuity sales fared, relative to the previous quarter, you would be remiss to overlook the fact that only 21% of carriers in the market experienced a loss in sales. Perform that same exercise, but with sales during this time, one year ago, and only 16% of product manufacturers experienced a loss in structured annuity volumes. This was a record-setting quarter for structured annuity sales, topping the prior 4Q2025 record by 3.51%. There is no question that 2026 will set a record for structured annuity sales.

What happens when the stock market is on the rise? Variable annuity (VA) sales fare well. This quarter was no exception to that rule, with VAs clocking a nearly 5% increase in sales from the prior quarter and a jump of more than 16% from this time, last year.

Note that only 65% of participants had sales climb compared to 1Q26 and nearly half of those reporting sales experienced a decline from this quarter, last year. While many are discussing a market correction, it seems logical that sales of VAs will fall. However, for now the market still seems to be upward trending, which will no doubt result in VAs closing out the year better than 2025, but by a small margin.

Like MYGAs, single-premium immediate income annuities (SPIAs) are commoditized. When the payout is great, the sales will follow. And payouts must be good because immediate income annuities experienced more than 28% growth over the last quarter and more than an 8% progression when measured against last year, same quarter.

The amazing part? More than 40% of participants experienced sales declines, when compared to 1Q2026. Thanks in large part to the number one seller of immediate income annuities, these products will likely sell more than they did in 2025, but not by much.

Deferred income annuities (DIAs) had a great quarter, despite the fact that 61% of participants experienced a drop in sales from last quarter. That said, nearly a quarter of the companies offering these products had triple digit increases in sales from Q1. Just the two top sellers of the product line had such substantial increases in sales that they effectively canceled-out the sales declines from other carriers.

And while evaluating the nearly 55% sales surge from last quarter, one needs to remember that we are reviewing a product offering that cannot keep pace and seems to wane a little more each year. Wink projects that DIA sales will be up for 2026, but certainly will not set any records.

© 2026 Wink, Inc. Reprinted by permission of the author.

Why Alt-Asset Managers Shouldn’t Own Life Insurers

Posted on August 29, 2026 by -

Alternative-asset-manager-owned life insurers are not simply another category of carrier alongside mutuals and publicly traded stock companies. They represent a fundamentally different ownership structure, built around a different set of interests.

A mutual insurer is owned by its own policyholders, which aligns the owner’s stake directly with the promises being made. A traditional stock insurer owned by a publicly traded parent files audited GAAP financials and reports quarterly to the SEC.

That discipline creates real incentives to keep the numbers accurate and transparent, both for company executives, who face civil and criminal exposure for misstatements, and for the Big Four accounting firms that audit those insurers and have their own franchise on the line.

An alt-asset-manager-owned insurer has neither discipline. It is privately held, reports only on a statutory basis, is often layered with fund-level leverage, and is owned by a fund with a seven-to-ten-year life built to generate a return and exit. The promise it stands behind may not come due for 30 or 40 years.

Asset manager ownership of life and annuity companies is also no longer a marginal corner of the industry. If Aquarian Capital’s pending $4.1 billion acquisition of Brighthouse Financial closes, roughly one-quarter of all U.S. life insurance general account assets will sit under alt-asset-manager control. The risks described below recur because owner and obligation are mismatched at the root.

Six Structural Risk Factors

Conflicted private-credit investment. Moody’s data indicate that the ten largest U.S. life insurers held approximately $352 billion of the industry’s $807 billion in private illiquid bonds—roughly 44% of the total. Several of those insurers are owned or backed by private-equity or other alt-asset managers, creating a significant concentration of private-market exposure within a relatively small group of carriers, which concentrates shock risk in a handful of names.

Alt-asset-manager-owned insurers also tilt toward higher-yield, less-liquid, more-opaque assets. Athene holds roughly 27% in private or illiquid credit, and Security Benefit roughly 26%, much of it loans backed by its own parent’s affiliates.

Private ratings that understate risk. Alt-asset-manager-owned insurers rely heavily on unpublished “private-letter” ratings that often assign more favorable designations than the underlying risk warrants. A preliminary Columbia Business School paper documents the pattern in detail.

Questionable capital relief from reinsurance. Private companies use 360% more leverage from affiliated reinsurance than others, according to ALIRT, and that leverage is only as good as the counterparty behind it. 777 Partners’ co-founder resigned in 2024 amid controversy; the SEC announced fraud charges in October 2025; and the firm filed for Chapter 11 on August 9, 2026, owing A-CAP $1.2 billion, down from a peak of roughly $2.3 billion. That is what happens when the counterparty turns out not to be there.

Thinner capitalization. An April 2025 ALIRT report found that alt-asset-manager-owned insurers carry roughly one-third less statutory capital than other U.S. life companies, a gap made more troubling by their reliance on affiliated reinsurance. PHLV’s $2B+ deficit vividly illustrates the risk to policyholders.

Absence of data relative to public companies. There are no SEC filings, no analyst or short-seller scrutiny, and, per the point above, increasingly no public rating on the hardest-to-value assets. A public company carries the countervailing discipline of quarterly SEC filings and Big Four audits. A privately held insurer files only statutory financial statements with its home-state regulator, where its assets are often carried at cost for statutory purposes.

Regulatory arbitrage. These companies domicile-shop for a friendlier regulatory posture. Iowa now regulates roughly $1.3 trillion in insurance assets and is the domicile of choice for Athene, Transamerica, F&G, American Equity, and the Sammons insurers, while New York’s stricter rules make it a domicile many avoid. They then reinsure much of the resulting liability offshore through structures engineered to fall just short of legal “affiliation.”

Security Benefit’s own Bermuda sidecar, SkyRidge Re, assumed roughly 80% of the carrier’s ceded reserves while claiming non-affiliated status, even though Security Benefit’s parent holds a stake in SkyRidge’s parent. The record here cuts both ways. A-CAP successfully blocked state regulators in Utah and South Carolina from suspending further sales, and yet 777 Partners — the counterparty at the center of both cases — filed for Chapter 11 on August 9, 2026, still owing A-CAP $1.2 billion.

When the underlying risk is real, but the legal case cannot be made to stick, that tells us something about the adequacy of the available tools.

Where This Leaves Us

None of this proves that every alt-asset-manager-owned carrier is mismanaged or that every sponsor is acting in bad faith. Delaware Life says it did not know. A-CAP “won” both of its regulatory fights by stopping state regulatory actions. The rating agencies, the auditors, and the state examiners all did something resembling their jobs. The pattern nonetheless keeps recurring.

Capital looks adequate until it is not. Reinsurance looks unaffiliated until the org chart says otherwise. Counterparties look solvent until they file for bankruptcy owing more than a billion dollars to the carrier that trusted them. One reading of this is that it is what a young, fast-growing corner of the industry looks like before it matures. The other is that the mismatch between an investor’s exit horizon and a 30-to 40-year policy obligation is structural rather than a growing pain. We think the second reading deserves more weight than it currently receives.

We cannot examine what we cannot see. That is ultimately the problem with alt-asset-manager ownership of life insurers. The issue is less that any given sponsor is dishonest and more that the ownership structure itself removes the tools that let anyone catch problems early: audited GAAP financials, quarterly SEC filings, public ratings, and analyst and short-seller scrutiny.

Combine that opacity with the six structural risk factors above and with the misalignment between a fund’s short exit horizon and a policyholder’s decades-long promise, and we find it hard to recommend an alt-asset-manager-owned carrier when a comparable, well-run mutual or publicly traded company is available instead.

Author’s note: This document is intended solely for registered representatives, investment advisers, and other institutional partners. The information contained herein includes discussions of sophisticated financial concepts, strategies, and institutional product data that are not suitable for retail clients. By accepting this material, you agree that you will not copy, forward, or otherwise show or disclose this document, or any part thereof, to any retail investor. Broker-dealers and financial advisors are responsible for ensuring that their use of this material complies with all applicable internal procedures and FINRA rules.

© 2026 Valmark Securities, Inc. Excerpted by permission of the author.

When the AI Bubble Bursts, Who Will Be Left Holding the Bag?

Posted on August 29, 2026 by -

A new paper making a stir in the financial press spells out the dangers to which private equity-owned life insurance companies are exposed by private credit funds with large portfolios of loans to software and AI companies. It’s a complicated story that could have enormous consequences.

Pranjal Drall and Andrew Granato, the report’s authors, argue that some of these insurance companies could become insolvent if these loans crash. And an unanticipated consequence of a 60-year-old rule that protects insurance company policy holders from losing all of their life insurance benefits or annuity payments could leave taxpayers holding the bag.

Let’s step back to understand some of the backstory. In 2022, I wrote about private equity firms gobbling up life insurance companies, and in 2026 about the risky, high-fee investments these companies were making with people’s life insurance and annuity premiums. Private equity firms are best known for theprivate equity (PE) buyout funds they sponsor. These funds buy up anything from doctor’s practices to single-family homes to youth sports leagues. PE funds use money committed by their investors as the down payment (the equity) on these acquisitions, and they use lots of debt to acquire companies in what are known as leveraged buyouts (LBOs).

As PE firms diversify their holdings, life and annuity insurance companies are an attractive target because they amass premium income, but may not need to pay out benefits for years or even decades. PE’s interest in owning life insurance companies emerged in earnest in 2009 following the Great Financial Crisis, and accelerated in the early 2020s. While traditional insurance companies mostly invested premium income in corporate and Treasury bonds, PE firms count on earning high fees for managing risky investments made with these assets, and on profiting from the spread between what it owes policyholders and what its investments earn.

There are no legal barriers to PE-owned insurance companies using their assets to support struggling companies also owned by their PE owner, and no prohibition on selling poorly performing loans of a PE-owned company to an insurance company owned by the same PE firm. PE-owned life insurers also extract value by transferring assets and liabilities to a shadow reinsurer it owns or is affiliated with. This can reduce the insurance company’s tax liabilities, lower its capital requirements and hide the extent of the risk it is exposed to.

Private Credit Funds Make Big Bets on Software and Data Centers

Stricter financial regulations put in place following the Great Financial Crisis were intended to prevent similar catastrophes in the future. The regulations limited the amount of debt that regulated financial institutions could put on a company, crimping the ability of PE funds to use as much debt in LBOs as they wanted. Banks were restricted from making riskier loans, and this resulted in small- and medium-sized companies finding it difficult to get bank financing.

Immediately, private equity firms stepped into the breach and created private credit funds to make direct loans to companies frozen out of public financial markets. Private credit funds are sponsored by investment firms, including PE firms. They are not subject to the regulations intended to make the financial system safer. They operate in the shadows, making risky loans to companies, many of whom don’t qualify for bank loans. Today, private credit funds hold $3 trillion in largely unregulated, high risk, opaque loans — many made to companies owned by PE firms.

Private credit funds have been a hot investment for the last 16 or so years. These loans are not subject to the rules that govern corporate bonds. Because the loans are risky, lenders demand a premium and borrowers pay high interest rates — a profitable situation that rewards investors in these funds. The funds have bet big on software firms that create code and develop management tools that businesses subscribe to, providing them with multi-billion-dollar loans.

The software tools manage various business operations — customer relationships, workflow and corporate spending — and are collectively known as Software as a Service (SaaS). Private credit funds are also behind the multi-billion-dollar loans to the huge data centers that AI firms are building to train their latest AI models.

Where do these billions of dollars come from? While there are multiple sources of funding for private credit funds — including investment banks like Goldman Sachs that are barred from making these loans directly, and pension funds looking for lucrative payoffs — private equity-owned insurance companies figure prominently as a source of capital for these funds. Investments in SaaS have been the bread and butter of private credit funds. The recurring income these companies generate from business subscribers have enabled them to make payments on their massive loans; default rates have been low.

But share prices of these software companies cratered in 2026 under pressure from Claude, AI company Anthropic’s code-writing frontier model and other similar models. As a whole, these AI tools are undermining the SaaS business model and challenging the “assumptions around software growth, pricing power and borrower durability.

“ Investors in private credit funds worry that many of the SaaS companies will not be able to repay their loans. Similar doubts are being raised about the construction of super expensive data centers that private credit funds are financing amid rising concerns about an AI bubble and anxiety about what will happen if the bubble bursts. Will many of the data centers become white elephants, deserted by the AI firms that planned to use them to develop new AI models? Will the return on investment in models trained in these expensive data centers justify business spending on these high-cost AI models? Will the much cheaper Chinese AI models out compete the US models and take market share away from American AI companies? These questions are raising doubts about whether all of these loans can be repaid. And if the loans can’t be repaid, what then?

Insurance Regulations Could Bail Out Risky PE Bets

PE-owned life insurance companies will see their investments in private credit funds crushed, marked down substantially or even wiped out. Private credit default rates above 15% may lead some insurance companies to become insolvent and unable to make good on the life insurance payouts or annuity payments promised to beneficiaries.

At that point, state Insurance Commissioners will step in. Rules put in place decades ago to protect beneficiaries of insurance companies enable the commissioners to require the remaining life insurance companies in the state to pay into a special guaranty fund that will make good on the policies held by the beneficiaries of the defunct company, up to a cap of about $300,000 on life insurance and about $250,000 on an annuity. That varies by state. Insurance companies not affiliated with a PE firm and that didn’t make risky bets on private credit will be required to bail out the failed insurance companies that did. And the PE firm that owned the insolvent company will get off scot-free and not have to pay anything. That creates a moral hazard and seems to be a miscarriage of justice.

But the story doesn’t end there. In 44 states, these payments are fully creditable over five years against state taxes on premium income. That means that, ultimately, it is taxpayers in those states that provide the backstop when software and/or AI companies can’t repay their loans to private credit funds, and a PE-owned insurance company that invested in private credit funds becomes insolvent. The result is, as the report’s authors point out, “a system that socializes losses.”

© 2026 Eileen Appelbaum. Reprinted by permission of the author.

Advisors’ allocations to private capital could reach $4.2T in five years: Cerulli

Posted on August 4, 2026 by -

U.S. financial advisors currently allocate $2.2 trillion to less-than-fully-liquid private capital, and could manage an additional $2 trillion in the next five years “if the buildout of interval fund solutions, the adoption of other less-than-fully-liquid private capital product, and the streamlined access offered by alternative asset allocation models continues to grow,” according to The Cerulli Report—U.S. Private Markets 2026.

Many advisors believe that allocations to private assets will demonstrate value-add to clients and respond to investors’ demand for income-generating investments, Cerulli surveys show.

To scale private market solutions across retail channels, partnerships between traditional and private capital managers will be key. “Traditional asset managers seek differentiated capabilities that can enhance their product offerings and support more competitive value propositions,” said Daniil Shapiro, director at Cerulli.

“Private capital managers often lack the distribution scale and brand recognition required to penetrate retail channels, particularly beyond the ultra-high-net-worth segment and into the broader affluent market.”

Distribution is expanding into models, multi-asset vehicles, and defined contribution (DC) plans, creating a greater need for collaboration among asset managers, technology platforms, turnkey asset management providers (TAMPs), trust companies, and recordkeepers, Cerulli said in a release.

© 2026 RIJ Publishing LLC.

Mapping Private Markets, the Apex of the Bermuda Triangle

Posted on August 3, 2026 by -

In a recent report, “Understanding the Growth of Private Markets: Structural Shifts in the Investment Industry,” the CFA Institute’s Research and Policy Center has done a useful service to Bermuda Triangle watchers by mapping the world of private market assets and its stakeholders. (See chart above/at right.)

That world represents one of three three legs of what RIJ calls the Bermuda Triangle strategy, which includes, within the same holding company: an alternative asset manager (e.g., Apollo, Blackstone, KKR, Eldridge, Guggenheim Partners), one or more life insurers that issue fixed deferred annuities (e.g., Athene, F&G, Global Atlantic, Security Benefit, Delaware Life) and an affiliated reinsurer in Bermuda or the Cayman Islands.

[Long-standing, stalwart life insurers like Prudential, MassMutual, Lincoln Financial, Pacific Life and others have adopted parts of this strategy. They’re more likely to sell registered index-linked deferred annuities (RILAs). These are SEC-regulated contracts that these insurers distribute through their familiar broker-dealer partners instead of through the insurance market organizations (IMOs) that emphasize fixed annuities.

The private market investment, and the alt-asset managers, can claim to represent the apex of the Triangle, since the other two legs are there primarily to help finance private credit and related high-yield assets. The life insurers buy the asset managers’ alt-assets and the reinsurers expand the life insurers’ annuity sales capacity by assuming the cost of some of their risks and letting them conserve capital or “release” it for stock buybacks or new ventures.

So, if you want to understand the Bermuda Triangle–or the increasing distribution by alt-asset managers of their private market products through retail channels (via exchange-traded funds) or through institutional channels (via 401(k) plans, it helps to understand the apex of the triangle. This chart will help.

Understanding The Private Market Ecosystem Stakeholder chart

Start at the low end of the chart. Asset Owners and Investors (bottom row) deploy capital upward through access vehicles—limited partner commitments to venture capital (VC) and private equity (PE) fund partnerships, business development companies (BDCs), interval funds, evergreen structures, and infrastructure funds—into four private market channels.

Corporate Issuers and Private Enterprises (top) access financing downward: startups and growth firms via venture capital, mid-market firms via private credit, restructuring and buyouts via private equity, and real asset projects via infrastructure funds. The Intermediaries bar (center) represents the asset managers, banks, NBFIs, and placement agents that channel capital between the two sides. Exit routes connect private to public markets (IPOs, trade sales).

The dashed connection between Private Equity and Private Credit reflects frequent cross-channel financing. The Policymakers and Regulators frame (yellow border) represents the regulatory architecture shaping the ecosystem—rules include Basel III, accredited investor reforms, defined contribution (DC) pension access, and dedicated fund structures (e.g., European long-term investment funds [ELTIFs], long-term asset funds [LTAFs]). GP stands for general partner; HNWI stands for high-net-worth individual.

© 2026 RIJ Publishing LLC.

The Animus behind DOL’s ‘Amicus Briefs’

Posted on August 3, 2026 by -

A human resources manager was once asked why the participants in her company’s 401(k) plan didn’t have a seat on the plan’s investment policy committee. “What do you mean?” she said. “Everyone on the committee is a participant.”

There’s an ambiguity in the regulation of 401(k) plans under the Employee Retirement Income Security Act of 1974 (ERISA). Where’s the line between plan sponsors and plan participants? And which side of the line does, or should, the Department of Labor (DOL) stand on?

Is there a contradiction between a plan sponsor’s duty to act solely in the participants’ best interests and an employer’s option not to sponsor a plan at all if the duties seem too onerous… in terms of litigation costs?

Different administrations in Washington appear to answer differently. By filing so-called “amicus briefs” on behalf of the corporate plan sponsors—the defendants—in several participant-led, ERISA-based class action suits, the Trump DOL has signaled its friendship with, logically, the corporations.

For example:

  • On July 10, a DOL amicus brief urged the U.S. Supreme Court to affirm a lower court’s dismissal a participant-led suit contending that in Anderson v. Intel, Intel Corp. acted imprudently by investing its 401(k) plan funds in hedge funds, private equity and other “non-traditional,” “allegedly risky” assets.
  • On July 21, a DOL amicus brief in Doherty v. Bristol-Myers Squibb asked the Second Circuit (Southern New York) to clarify the business requirements for corporate decisions to execute pension risk transfers (PRTs). This suit challenged Bristol-Myers Squibb’s decision to exchange its defined benefit plan assets for a group annuity issued by life insurers in Athene Holding, a segment of Apollo Global Management.
  • On July 24, a DOL amicus brief urged the U.S. Court of Appeals for the 4th Circuit (Eastern North Carolina) to affirm a district court’s decision to dismiss the claims in Stana v. SAS Institute Inc., that the employer breached its fiduciary obligations by not using forfeited funds (i.e., employer “matching contributions” forfeited by employees who separate from the employer before their contributions vest) for plan expenses.

It’s a truism that corporations’ biggest fear in sponsoring 401(k) plans, in picking service providers, and signing off on investment menus, is getting hit with federal class-action suits where participants question their decisions and demand tens of millions of dollars in compensation for alleged violations of ERISA’s requirement that sponsors act prudently and “solely” in the interests of participants.

In its amicus briefs, the Trump DOL addresses that fear, and leans in on behalf of the plan sponsors. Besides supporting the plan sponsors’ legal positions, the DOL warns that participant-led ERISA lawsuits, and the plaintiffs’ attorneys who bring them, threaten to discourage corporations from sponsoring plans at all. That reverses the Obama DOL’s approach.

These cases have other implications—pertaining to a plan sponsor’s choice of a “Bermuda Triangle” annuity issuer (in Doherty v. Bristol-Myers Squibb) and a 401(k) plan sponsors right to put alternative investments in its plan (Anderson v. Intel). But let’s look first at the Trump DOL’s shot-across-the-bow at participant-led suits in general.

‘Disincentivizing employers’

In its press releases, the Trump DOL gets right to the point. Its interventions in these cases aren’t just tactical but also strategic: to discourage future participant-led federal class-action suits against 401(k) plan sponsors.

A DOL’s press release called its amicus brief in Anderson v. Intel “one in a series filed by the DOL focused on ending the overuse of litigation against ERISA retirement plans and those who manage them.” The department’s press release about Stana v. SAS Institute said, “Continued litigation of this type could have the unintended effect of disincentivizing employers from creating retirement plans.”

In its amicus brief in Stana v. SAS Institute, the DOL took close aim at plaintiffs’ attorneys when it wrote, “private-party ERISA litigants (or, more specifically, private-party ERISA litigators) are now trying to contort these well-intentioned shields [i.e., “ERISA-imposed fiduciary duties” on plan sponsors] into cynical swords that often hurt the American worker.”

In the Bristol-Myers case, the DOL brief “argues that pension risk transfers benefit both employers and beneficiaries when not disrupted and litigating business decisions can hinder or eliminate benefits.” The department added that “continued litigation could deter employers from derisking their plans and ultimately upset the balance Congress established between federal and state regulation.”

The DOL characterizes decisions to trade a defined benefit plan for a group annuity as “business decisions” rather than participant-driven decisions, and characterizes pension risk transfers as a defined benefit (DB) plan sponsor’s effort to “derisk” a DB plan rather than a decision to reduce the sponsor’s costs in operating the plan.

Plaintiffs’ attorneys representing participants feel differently. “The DOL of old would frequently file amicus briefs on behalf of plaintiffs,” said Edward Stone, a Greenwich, CT, ERISA plaintiffs’ attorney. “We are seeing a DOL made in Trump’s image.  It has surrendered its ERISA watchdog role and morphed into a big player in the game of regulatory Jenga. It will inevitably lead to huge policyholder losses and get out of jail free cards for those foxes guarding the henhouse of retirement security.”

The future of private market assets in 401(k)s

The DOL’s intervention in Anderson v. Intel struck one knowledgeable observer as aligned with the Trump administration’s August 2025 executive order blessing alternative assets, including private equity, private credit, retirement income-generating tools, and even cryptocurrency, in 401(k) investment menus.

In that case, first filed in slightly different form a decade ago, former participants sued Intel for keeping hedge fund and private equity investments in its customized target-date fund series even as these investments hurt the funds’ performance. A federal appellate court has affirmed a lower court’s dismissal of the participant’s suit.

The Circuit Court judge ruled that the plaintiffs hadn’t provided a suitable benchmark against which to measure the performance of the Intel TDFs with private market assets. (The case is a bit unusual: Intel had used alternative investments in its defined benefit plan. When designing the target-date fund for its 401(k), the computer chip maker put alternative assets there as well.)

Mark Fortier was an executive at AllianceBernstein, the asset manager that succeeded Intel as investment manager of Intel’s target-date fund. Alternative asset managers, he said, might try to use the Intel ruling, along with DOL’s amicus brief, to show plan sponsors that they can include private market assets in their target date funds as long as they carefully look for and find an appropriate benchmark.

“The [DOL] amicus briefs [in the Intel case] give alternative asset managers marketing material to give sponsors,” Fortier told RIJ. “The asset managers like that story,” he said. “They can say, ‘Don’t worry, a prudent [due diligence] process will set you free.”

But the ambiguous nature of private market assets—are they volatility-reducing diversifiers or yield enhancers—might hinder the search for a suitable benchmark for their expected performance in target-date investments that include an allocation to them, Fortier believes.

“This is a subtle issue that the Intel suit doesn’t address,” he told RIJ. “What is the asset class that you’re trying to benchmark?” Do private market assets/alternatives deliver a higher return for the same risk as public market assets, as the alt-asset managers say? Or do they deliver the same returns for a lower risk, as the hedge fund managers say?

You can’t have it both ways, he said: “The “no free lunch” advocates like myself don’t buy it.” And a plan sponsor can’t choose an appropriate benchmark until it determines what alternative assets are supposed to do.

Amicus v. animus

ERISA was passed in 1974, near the end of a decade of civil unrest in the U.S. and of new “civil rights” legislation that recognized minority rights and that was aimed at placating, rather than punishing, much of the unrest. That legislation spawned thousands of pages of regulations, which put teeth in the laws.

Champions of a myriad of newly-articulated rights—not only of people of color but of voters, women, the environment, the aged and disabled, animals, tenants, the incarcerated, and pension plan participants—were soon able to wield those regulations as legal weapons against large corporations in class-action suits that organized previously diffuse interests into powerful “interest groups.”

From the beginning—no later than the 1968 presidential election—the wave of civil rights reform sparked a counter-reformation from both Democratic and Republican administrations. Their animus was directed at “regulations” and “red tape” in general, but it often included criticism of the litigation targeting politically-influential corporations, filed by plaintiffs’ attorneys whose fees were contingent on victory in court, that the regulations made possible.

The DOL’s recent ERISA briefs signal the Trump administration’s amicus with that animus.

© 2026 RIJ Publishing LLC.

Indexed annuity updates from Corebridge and Delaware Life

Posted on August 1, 2026 by -

Corebridge enhances Power Series

Corebridge Financial, whose merger with Equitable nears completion, has added Protected Growth Benefit and “preset allocation options” to select versions of The Power Series of Index Annuities. The changes will enhance “the accumulation and diversification capabilities” of the company’s index annuities, a release said.

Protected Growth provides a guaranteed minimum accumulation benefit (GMAB). “While there are no fees for this optional product feature, interest crediting rates are lower when Protected Growth is elected,” according to the release. The Protected Growth Benefit rate for contracts with a 7-year surrender period is currently 26.25% and 17.5% for contracts with a five-year surrender period.

A contract with a $100,000 premium would have a guaranteed minimum contract value of $126,250 after seven years or a guaranteed minimum contract value of $117,500 after five years, depending on the term of the contract. The Protected Growth Benefit is available only on Power Index 5 Plus and Power Index Plus and is not available in California or New York.

Contract owners can pick any of five pre-set, blended indexing strategies – U.S. Stability, Global Stability, Balanced, U.S. Growth, and Global Growth – that include allocations to the S&P 500, Russell 2000, PIMCO Global Optima Index, MSCI EAFE, ML Strategic Balanced Index and Franklin Quality Dividend.

Pre-set allocation options are available in select products within The Power Series of Index Annuities family. There are no fees associated with this product feature. For more information, visit What We Offer on corebridgefinancial.com.

Delaware Life introduces TrackGuard+

Delaware Life Insurance Co. has launched TrackGuard+, a bonus fixed index annuity (FIA) that adds “a high upfront premium bonus” and “enhanced in-contract liquidity” to several index crediting strategies and the customary principal protection.

TrackGuard+ features:

  • A 21-26% bonus on the first-year premium. The bonus varies by state and is subject to a recapture schedule if the contract is surrendered during the surrender period. The client keeps all the interest credited to the bonus from contract issue even if the bonus is later recaptured.
  • Available indexes are the S&P 500 Dynamic Intraday TCA, Nasdaq-100 Volatility Control 12%, BlackRock U.S. Equity Bitcoin Balanced Risk 12%, Barclays Aries, and the S&P 500.
  • Beginning in the second contract year, for 0.95% fee, clients can carry forward any unused free withdrawal percent from the prior year, stacking on top of the standard 7% annual allowance for up to a maximum of 28% penalty-free access in a single year. The benefit applies even after a prior-year withdrawal.
  • Starting in the fifth contract year, policyholders are guaranteed at least 100% of premium (less withdrawals and net of market-value adjustments, recaptured bonus, and contingent deferred sales charges) on surrender. The benefit increases to amounts exceeding 100% of premium in later years.
  • At the end of year 10, the Premium Guard benefit ensures the account value is at least equal to premiums plus premium bonus (less prior withdrawals and recaptured premium bonus). The Premium Guard Credit will be applied pro-rata across the current allocations after any applicable fees are taken.

© 2026 RIJ Publishing LLC.

CANNEX’s new CEO: Gary Baker

Posted on August 1, 2026 by -

CANNEX, a leading provider of pricing, data and analytics for annuities in North America, and for banks’ term deposits and guaranteed interest contracts (GICs) in Canada, has named Gary Baker as its new Chief Executive Officer.

Previously the Chief Operating Officer of CANNEX, Baker succeeds Lowell Aronoff, who cofounded CANNEX in 1984. Aronoff will become the chairman of a newly created board of directors.

Baker brings more than 30 years of financial services experience focusing on retirement products, including prior executive roles at Mass Mutual and GE Capital, and has spent the last 16 years helping shape CANNEX’s growth.

“The pace of technological change in our industry is faster than at any point in CANNEX’s history, and our clients expect us to move with it,” said Baker. “We are accelerating our investment in AI-enabled infrastructure to build the next generation of data and analysis solutions in support of regulatory standards in the U.S. and Canada.

“This is a natural evolution of the strong foundation Lowell and our late cofounder, Alex Melvin, built over the past 40 years, and I’m energized to lead CANNEX into this next phase.”

“Over the past 16 years, Gary has been an incredible leader within CANNEX,” said Aronoff. “He understands what makes CANNEX unique and how to leverage our strengths to capitalize on the opportunities we see to grow the business at this critical moment.”

© 2026 RIJ Publishing LLC.

Bracing for Health Costs in Retirement

Posted on August 1, 2026 by -

The cost of health insurance shouldn’t be an American retiree’s biggest financial worry; Medicare does much of the heavy lifting. But Medicare isn’t free, nor are Medicare supplements. Insurance premiums, co-pays, deductibles are additional future expenses that retirees, or retirees’ financial advisers, shouldn’t ignore.

And then there’s the Medicare surcharge (the “IRMAA”) and possibly the costs of “continuing care,” long-term care or LTC insurance. Some of these health care-related expenses are foreseeable while others are, as the aging mind and body discovers, quite unpredictable.

But now there are apps for that. And there’s research that might inspire advisers to add such apps to their retiree toolboxes.

In a report published earlier this year, HealthView Services, a Middleton, Massachusetts firm that produces the apps and generates the research, presented national actuarial data (based on 530 million health care cases) showing that for an average healthy 65-year-old couple, total annual healthcare costs for traditional Medicare programs commonly selected by advised clients, which includes Parts B, D, Medigap (Plan G) and out-of-pocket expenses, will rise from $14,678 in the first year of retirement to $49,094 at age 85, assuming that the man lives to age 88 and a female spouse to age 90.

Over a couple’s lifetime (48 person-years in the example), HealthView projects combined healthcare costs of $581,587 (in today’s dollars) or $839,596 (in future, inflation-adjusted dollars). Those estimates don’t include long-term care expenses or Medicare surcharges (the IRMAA, or Income-Related Monthly Adjustment Amount) on single Medicare beneficiaries with taxable income (in 2026) over  $109,000 or couples earning over $218,000.

( Kiplinger.com reports that “The IRMAA Part B surcharge [for 2026] ranges from $81.20 to $487.00 monthly, or $974.00 to $5,844.00 annually, on top of the base premium of $202.90. The IRMAA surcharges for Part D in 2026, based on the national base beneficiary premium of $38.99, range from $14.50 to $91 per month, or an annual rate of $174 to $1,092.)

HealthView updates its estimates regularly. Fidelity Investments has published similar data in the past. If their estimates are shocking, it’s mainly because they’re lump-sum present-values and future-values. In the real world, most people experience health insurance premiums as a flow of payments, not a single payment. Also, Medicare premiums are deducted from Social Security benefits, so much of the pain is indirect.

On the other hand, with the costs of health insurance and health care rising faster than the Consumer Price Index and possible cuts in Social Security looming—and with advised clients most likely to be among the 8% of high-income Americans who will pay the IRMAA—knowledge of post-65 health care costs and how best to finance them could well be a value-add for advisers.

One way to prepare for lower Social Security benefits would be to pre-fund the gap left by the potential cuts, which HealthView expects to range from 17% to 22%, depending on each retiree’s current benefits, according to a July 2026 HealthView white paper, “Social Security Solvency & Retirement Planning: Calculating Lost Benefits and Income Solutions.”

“Assuming a 6% annual rate of return, an average-earning couple would [at age 54] need to put aside an additional $52,000 to $55,000 today to generate annual withdrawals sufficient to make up for a 17% decline in Social Security benefits. A high-income couple will require between $123,000 and $130,000,” the paper said.

Health care expenses in retirement vary with health status, lifestyle habit, income, state of residence and gender, HealthView data shows. The projected costs for an individual or couple with Type 2 diabetes would be significantly lower due to shorter life expectancy.

Women live longer than men but have lower Social Security benefits, so they face a special challenge; added longevity increases their average retirement healthcare costs by about 15%. “When a partner passes away, women from more affluent households potentially face the dual challenges of lower retirement income and higher Medicare premium surcharges based on MAGI,” the report said

RIJ’s takeaway: Illness during retirement and outliving one’s savings pose financial adversities that may or may not occur, depending largely on how long one lives. Given their high costs and uncertain occurrence, these are the precisely types of risk that most people—all but the wealthiest—can finance most efficiently with insurance—especially mandatory social insurance, which spreads those risks across the largest possible populations.

That’s the rationale for Social Security and Medicare, and why most Americans are grateful for them. Investments are about taking financial risk to accumulate wealth. Insurance is about offloading financial risk to preserve wealth. Each plays an important role in retirement income planning.

© 2026 RIJ Publishing LLC.

Group 1001’s ‘affiliated transactions’ spark federal investigation

Posted on August 1, 2026 by -

The news broke last month that the U.S. Department of Justice and Securities and Exchange Commission officials have been investigating two life insurers controlled by Mark Walter, the billionaire owner of the world champion L.A. Dodgers, CEO of $362 billion asset manager Guggenheim Partners, and chair of TWG Global and Group 1001, an insurance holding company that includes Delaware Life Insurance Co.

In its first quarter statutory filing, released June 26, Delaware Life—which sold more than $10 billion worth of fixed deferred annuities in 2025, according to LIMRA—and Clear Spring Life and Annuity Co. (formerly Guggenheim Life and Annuity), both units of Walter’s holding company, Group 1001 (formerly Delaware Life Holding), a unit of TWG Global, disclosed that:

In February 2026, the Company and its affiliate, Clear Spring Life and Annuity Company (CSLAC), received grand jury subpoenas in connection with an investigation being conducted by the U.S. Attorney’s Office for the Southern District of New York; the U.S. Securities and Exchange Commission is conducting a parallel investigation (collectively, the Investigation). The Company is cooperating with the Investigation.

The Company understands that the Investigation is focused on whether certain private credit investments introduced to the Company and CSLAC by an affiliate should have been treated as affiliated or related-party transactions. Subsequent to receiving the subpoenas, the Company initiated an internal investigation to review its affiliated and related-party disclosures.

Through the internal investigation, errors were identified relating to the identification and presentation of certain related-party investments as presented in the Company’s 2025 Annual Statement. Specifically, certain private credit investments were identified as being predominantly contingent on the performance of related parties.

Group 1001 owns both alternative asset managers that run private credit businesses and annuity-issuing life insurers whose reserves help fund the private credit businesses. Such “affiliated” investments must be reported, since investors might find them conflicted and a hidden source of concentrated risk.

According to a Bloomberg report, the DOJ and SEC subpoenas “prompted Delaware Life and Clear Spring to run their own internal reviews, which turned up what the companies described as errors in prior financial reporting. The restatement was significant: Delaware Life had previously told regulators that roughly 3% of its investments, about $1.4 billion, involved related parties connected to Walter’s other businesses. The corrected figure came in at more than $17 billion, or at least 39% of total invested assets, as of the most recent year-end. An earlier related-party total, as of December 2024, ran to more than $11 billion.”

Three ratings agencies, SPGlobal, AM Best and Fitch, subsequently downgraded the outlook for the Group1001 insurers.

Lincoln Financial announces deals with Bain Capital and Fortitude Re

Lincoln Financial’s announcements of its second quarter 2026 net income and of its deals with Bain Capital, Talcott Financial, and Fortitude Reinsurance sent the share price of Lincoln National Corp. (NYSE: LNC) up 11% last Thursday, to $46.18.

Lincoln will be getting unprofitable business off its balance sheet, investing in more profitable “spread” businesses, and hiring Bain Capital to manage its investments in alternative assets. Lincoln reported net income available to stockholders of $1.32 billion in the second quarter, up from $688 million in the same period a year earlier.

In its second quarter earnings call, Lincoln said it has entered into a $5.8 billion reinsurance transaction to cede a block of in-force guaranteed universal life policies to a subsidiary of Talcott Financial Group, according to AM Best’s BestWire. Chief Financial Officer Christopher Neczypor expects the deal to close in the fourth quarter.

The deal will further reduce Lincoln’s exposure to a capital-intensive block of business. To date, the company has reinsured approximately 60% of its total in-force GUL.

The deal will be funded with part of the $825 million that alternative investment firm Bain Capital paid last year for a 9.9% equity stake in Lincoln. For its part, Lincoln committed $1.4 billion in assets for Bain to manage. Neczypor said that amount will grow to at least $20 billion by the sixth year after the close.

The non-exclusive asset management agreement will include private and structured credit, residential mortgage loans and private equity, among other classes, he said. Proceeds from the deal will be used to fund Lincoln’s growth in spread-based businesses, Neczypor said.

On the reinsurance leg of the overall strategy, in May Fortitude Reinsurance Co. Ltd. announced a $28 billion agreement to reinsure “a significant portion” of Lincoln’s universal life insurance and fixed annuity business. Lincoln will continued to service and administer the reinsured policies.

“The deal is structured partly as coinsurance with funds withheld and partly as a modified coinsurance transaction with counterparty protections including over-collateralization and investment guidelines aligning with its risk-management framework,” Lincoln said.

The transaction will represent an “all-in” statutory capital impact of approximately $200 million and reduce Lincoln’s risk-based capital ratio by approximately 10 percentage points, it said. It will result in a $30-40 million increase in annual subsidy remittances over the medium term.

In the Talcott deal, the statutory reserves to be transferred account for about 37% of Lincoln’s remaining in-force GUL block, the company said. Lincoln will also reinsure approximately $500 million of funding agreement business with a Talcott subsidiary.

Lincoln reported total annuity sales in the second quarter of $3.5 billion, down 13% from a year earlier. Spread-based products accounting for 63% of that total, Lincoln said in an earnings announcement. The segment reported a record-high in ending account balances, net of reinsurance, of $182 billion, up nearly 9% on a yearly basis, the company said.

Underwriting entities of Lincoln National Corp. currently have Best’s Financial Strength Ratings of A (Excellent).

Venerable to manage Guardian variable annuity assets

The Guardian Life Insurance Company of America has agreed to move ~$4.5bn in separate account assets in Guardian’s variable products trust to mutual funds advised by SunAmerica Asset Management, LLC (SAAM), according to SAAM’s parent, Venerable Holdings, Inc.

The deal is anticipated to close in late 2026, pending approvals. Venerable and SAAM, which Venerable acquired in 2026, manage the mutual funds underlying the variable annuity businesses of Venerable Insurance and Annuity Company and Corebridge.

An investor group led by affiliates of Apollo Global Management, Inc., Athene Holding Ltd., Crestview Partners, and Reverence Capital Partners created Venerable in 2023.

“The included funds will become a variable insurance mutual fund trust managed by SAAM through a series of fund mergers. The parties expected the arrangement to enhance scale and growth potential while continuing the investment strategies,” according to the release.

The private company owns and manages legacy variable annuity business, including variable annuities acquired from other entities. It has operations in West Chester, PA, Des Moines, IA, Houston, TX, and New York, NY.

© 2026 RIJ Publishing LLC.

Annuity issuers borrowed $153B from FHLBs in 2025: AM Best

Posted on July 1, 2026 by -

U.S. life/annuity insurers’ borrowings from the Federal Home Loan Banks (FHLBs) slowed in 2025, but still grew by 10% year-over-year, driven predominantly by funding agreements, according to a recent AM Best report.

The Best’s Special Report, “Funding Agreements Drive FHLB Borrowings for the L/A Industry in 2025,” states that borrowings in the form of funding agreements totaled $153 billion in 2025, compared with $136 billion in the previous year, as annuity writers have been able to leverage the lower cost of borrowing from the FHLBs and gain a favorable spread on investments. Although the FHLBs provide an inexpensive short-term financing option potentially used to increase investment income, an insurer may be exposed to credit risk, collateral risk and market risk.

The FHLBs are a system of 11 regionally based government-sponsored banks providing liquidity to financial institutions to promote housing and community initiatives. Insurers can gain access to the FHLB if they engage in mortgage lending and purchase FHLB stock and must post collateral to receive advances.

According to the report, borrowing capacity grew at a faster rate than borrowings in 2025, increasing by 18%, again heavily driven by annuity writers.

“Borrowing capacity is still broadly available, although it is somewhat more limited than in 2019, before the more recent annuity sales boom amid private capital heavily entering the life/annuity industry,” said Jason Hopper, associate director, Industry Research and Analytics. “Two-thirds of companies used less than half its available capacity in 2025, which is up from 62% in 2019; however, a notably higher share of companies have outstanding borrowings today as compared with 2019.”

Other takeaways in the report include:

  • Favorable crediting rates have led to a surge in deposit-type contracts by insurers, including guaranteed investment contracts (GICs). While the amount of FHLB funding agreements reported as GICs and as premium or other deposit funds rose notably over the last two years, the share of the total balance has hovered steadily around 22% for the industry in aggregate.
  • Since FHLB funding agreement borrowers are predominantly companies that sell annuities and spread-play business, the investment profile of these borrowers closely mirrors that of the individual annuity composite in asset classes such as private placements and affiliated and high-risk investments, as well as bond yields.

Cayman regulator aims for ‘jurisdictional maturation’

The Cayman Islands Monetary Authority (CIMA) issued a Thematic Review of Reinsurance Companies last month, finding that corporate governance accounts for 68% of all weaknesses identified across the Class B(iii) and Class D reinsurers examined.

While Bermuda is still the main reinsurance domicile for life/annuity companies, Cayman’s reinsurance industry has expanded to an institutional level, with 114 reinsurers, around US$30 billion in premiums, and US$102 billion in assets.

The review covered both life/annuity and P&C reinsurers holding these license classes, but the governance findings are “particularly material for commercial platforms with billion-dollar balance sheets,” according to one assessment by Walkers, a legal, compliance, and fiduciary firm.

“Cayman is aligning its governance expectations with the institutional standards that cedants, their US state regulators, rating agencies, and other key stakeholders already expect from major reinsurers,” Walkers attorneys wrote. “As the industry grows, supervisory standards are evolving accordingly.

“Jurisdictions with significant reinsurance markets that are reviewed by the IAIS already adhere to these governance standards; similarly, all Cayman platforms serving the same cedants must meet these expectations. This is a sign of jurisdictional maturation and a call to action to strengthen documentation, processes, and service-delivery frameworks across the industry.”

Apollo caps withdrawals from private credit fund

Apollo Global Management Inc. is again limiting withdrawal requests from its largest non-traded private credit fund for retail investors, as broader concerns about the asset class persist, Bloomberg reported.

Apollo Debt Solutions, which has roughly $25 billion in assets, capped withdrawals at 5% of outstanding shares on Monday after investors asked to redeem 16.8%, according to a shareholder letter. Redemption requests in the quarter were higher than the 11.2% investors wanted to pull in the prior period.

The fund reported that it has generated an 8.1% total net return since it was launched.

Apollo is the latest alternative asset manager to cap investor withdrawals for the second quarter running as concerns over private credit’s exposure to software firms and the potential for AI disruption rumble on.

Apollo President Jim Zelter said in May that redemptions from BDCs are likely to continue for the next two quarters following a turbulent first quarter for the sector, and that such requests could even increase.

‘Sidecars’: A source of funds and fees for Bermuda Triangle players

Strong U.S. annuity sales has led to increased formations of sidecars, with total ceded reserves to sidecars or entities engaged in sidecar-like activity increased to more than $90 billion in 2025 from $55 billion in 2023, according to a new AM Best report.

“The vast majority of reserves ceded are covering liabilities for indexed and fixed annuities,” said Best’s Special Report, “Big Year of Growth for Life/Annuity Sidecar-Like Activity in 2025.”

The formation of reinsurance sidecars has been confined generally to private equity/asset manager-backed insurers or insurers with investment management subsidiaries, the report’s author said. These sidecars can earn fees for the contributing owners, providing additional revenue streams for diversification.

“Individual annuities have experienced significant growth amid rising interest rates over the last few years, which has created space for additional capital to enter the reinsurance market and provide capacity as annuity writers aim to manage growth and maintain adequate capitalization. “As a result of managing strong premium growth through reinsurance, the individual annuity composite has steadily seen its reinsurance leverage double since 2019. In addition, overall surplus relief of nearly 11% in 2025 was double that of the previous year.”

“Sidecars… have become more pronounced in the life/annuity industry since 2021,” said Jason Hopper, associate director, Industry Research and Analytics, AM Best, adding that “reinsuring a block of fixed-indexed annuities to a sidecar… could go on for decades.” By contrast property/casualty sidecars have finite lives funding short-term risks with liquid assets.

The report also said:

  • Sidecars currently account for a range from low single digits up to over three-quarters of ceded reserves (i.e., reserve credit taken plus modified reinsurance reserves) by the ceding company, signaling more counterparty concentration at some companies.
  • Companies ceding reserves to sidecars have an outsized share of funds withheld in coinsurance compared with the industry aggregate. While sidecars account for approximately 4% of the industry reserve credit taken at primary insurers, they account for 10% of funds withheld.

Sixth Street invests in Monument Re

Investment firm Sixth Street has agreed to acquire a majority stake in Monument Re, a life insurer and reinsurer that acquires and manages in‑force life insurance portfolios in Europe. Hannover Re will remain a shareholder and reinsurance partner in Monument Re.

Sixth Street Insurance said it advises on more than $125 billion in insurance company assets.

Investment vehicles that Sixth Street manages or advises will acquire the stake, the release said.  Monument Re will gain capital and resources to accelerate its business plans and continue to operate as a standalone company. The transaction is expected to close by year-end. Hannover Re said it will remain a reinsurance partner and shareholder.

The combined market presence and experience of Sixth Street and Hannover Re positions Monument Re for ongoing growth, Monument Re Group CEO Carlo Elsinghorst said in a statement.

Last year, Monument Re transferred a €1.4 billion ($1.56 billion) legacy reinsurance portfolio to RGA Americas Reinsurance Co. Ltd., to focus on European life insurance consolidation. It said the portfolio was comprised of annuity and other life insurance liabilities it acquired in a 2020 Greycastle Holdings Ltd. Transaction.

  • © 2026 RIJ Publishing LLC. All rights reserved.

Major financial firms partner on public/private model portfolios

Posted on July 1, 2026 by -

Morningstar’s Morningstar Wealth division is partnering with Apollo Global Management, Franklin Templeton and J.P. Morgan Asset Management to create research-backed model portfolios that combine both private and public market assets for retail investors and their advisors.

“Morningstar Public/Private Select Series” will combine:

  • Morningstar Wealth’s asset allocation, manager research, and due diligence capabilities
  • Public market strategies from Franklin Templeton and J.P. Morgan Asset Management
  • Private market strategies (including private credit and real estate) from Apollo and Franklin Templeton

Morningstar Wealth is a group within Morningstar Investment Management LLC, a registered investment adviser, which offers advisors investment strategies such as model portfolios and separately managed accounts (SMAs). The group has $370 billion in assets under management.

The portfolios will be constructed with ETFs and interval funds to make private markets usable in individual investor portfolios, offering:

  • Six risk-based portfolios, ranging from capital preservation to aggressive growth
  • Public and private exposures integrated into a single asset allocation
  • Transparent, competitive pricing, including no overlay fees
  • Accessible minimums, expanding access beyond traditional institutional investors

“By packaging private market exposure within a diversified model, Morningstar Wealth aims to remove the burden of sourcing, sizing, and managing liquidity, allowing advisors to focus on client needs rather than portfolio construction,” a Morningstar release said.

“The initial models will include exposure to private credit and real estate through interval funds ranging approximately between 12–20% of the models’ allocation, depending on risk profile and current market opportunity.”

Private markets have historically been limited to institutional investors and ultra-high-net-worth individuals. At the same time, industry demand continues to grow, with advisors increasingly seeking to incorporate private markets into mainstream portfolios.

Pacific Life and Principal Add Payout Options to 401(k)s

Posted on July 1, 2026 by -

Retirement plan sponsors, if they decide to bundle an annuity-linked income distribution tool into their default investment offerings (usually target-date funds or trusts), must also decide what type of annuity they want to offer plan participants. With the SECURE Acts, Congress encouraged deferred annuities in 401(k) plans without championing any particular make or model.

There are a growing number of them on the market. While all of the proposed annuities help participants convert part of their accumulated savings into a monthly incoming at some point during retirement, and they all (by law) allow participants to liquidate their annuities if they leave their plans, they differ in their pre-retirement crediting mechanisms, their flexibility for the owners, and in the scope of their guarantees.

Two major retirement plan providers just announced new or refreshed income options. Pacific Life has a deferred income annuity purchased incrementally in advance of retirement. Principal Financial offers either a choice between a group annuity that wraps a lifetime withdrawal benefit wrapper around participant accounts and a fixed indexed annuity with an aspirational payout rate.

  • Principal LifeTime Income Builder Index, a QDIA-eligible option with a growth-oriented, passively invested TDF portfolio. The portfolio begins allocating to a fixed indexed annuity (FIA) about age 47 and automatically transitions to distributing 6% income at around age 65.
  • Principal is also adding third-party retirement income TDF series through new strategic partnerships with TIAA/Nuveen, the LifeCycle Income Index (The trustee for the NLI CIT series is SEI Trust Company) and Income America 5forLife.

[Pacific Life’s and Principal’s 401(k) annuities can be located on this “401(k) Lifetime Income Solutions Map.” It’s available at the Defined Contribution Institutional Investment Association’s Resource Library.]

The six percent payout is the targeted but not guaranteed percentage for a single life payout. Three-fourths (4.5%) of the six percent is designed to come from the FIA and the rest from the fund’s other assets until those assets are exhausted, a Principal release said. Participants who save in Income America’s 5forLife can receive a guaranteed minimum annual withdrawal benefit (GMWB) of 5% of the value of their savings at age 65 for the rest of their lives, even if their own money runs out. As with all GMWB riders, retirees can dip into their savings but would see a reduction in monthly income.

Principal’s retirement business serves more than 13 million participants at more than 46,000 plans.

Income Horizon from Pacific Life

Pacific Life has launched Income Horizon, a collective investment trust (CIT) series with an embedded deferred income annuity “designed to help defined contribution (DC) plan participants accumulate guaranteed lifetime income” before retirement, according to a release.

A subsidiary of Broadridge Financial Solutions, Matrix Trust Company, will serve as the discretionary trustee and provide CIT governance, fiduciary oversight, and operational infrastructure, the release said.

“Unlike approaches that rely on estimates of future income, Income Horizon uses clearly defined income units that represent a specific amount of guaranteed lifetime income,” the release said. “These units help provide participants with greater clarity around their accumulated income, empowering individuals to plan for retirement with enhanced precision.”

Income Horizon is a Group Annuity Contract issued to an Income Horizon Collective Investment Trust (CIT) by Pacific Life Insurance Company, which is licensed to issue insurance products in all states except New York.

According to Pacific Life’s website, “Income Horizon is an in-plan deferred income solution delivered through a Collective Investment Trust (CIT) structure. Beginning at age 50, a portion of participant deferrals may be automatically allocated to build guaranteed lifetime income directly within the plan.” Participants gradually accumulate units of lifetime income, worth $1 of income per unit assuming a single-life payout starting at age 70. The cost per unit would apparently fluctuate over time, depending on such variables as current interest rates and the participant’s age.

The Income Horizon CIT series is available through the National Securities Clearing Corporation (NSCC). Pacific Life and Broadridge Financial Solutions are not affiliated.