Archives: Articles

IssueM Articles

Data Connection

Posted on March 4, 2026 by No Author -

What America pays for health care in retirement: Healthview

Posted on March 3, 2026 by Editorial Staff -

HealthView Services has released its February 2026 report on expected health care costs, including premiums, co-pays and other expenses, for American retirees. The top-line numbers look huge at first, but they are the sum of costs over 25 or more years.

And some of those costs come out of retirees’ Social Security benefits.

The cumulative lifetime cost of health care for retirees varies widely, depending on whether they live in big northern cities or rural areas along the Gulf coast, the inflation rate, and the number of years they live. The size of the surcharges they’ll owe on their Medicare premiums, if any, will depend on their income in retirement. Here are HealthView’s latest findings:

Retirement healthcare cost projections

National average lifetime premiums for Medicare Parts B, D, and supplemental insurance are projected to be a combined $688,996 for a healthy 65-year-old couple retiring in 2026. If deductibles, copays, hearing, vision, and dental are added, total costs could increase to $955,411.

Variance by state

Total lifetime projections for the couple described above range between $878,565 in Washington State and $1,053,252 in Missouri.

Healthcare costs vs. Social Security benefits

HealthView’s Retirement Healthcare Cost Index compares lifetime projected medical expenses and anticipated Social Security benefits. With Social Security cost-of-living adjustments (COLAs) estimated at 2.4% and healthcare costs projected to rise at an average of 5.8%,

A healthy 55-year-old couple (with average Social Security benefits and national average healthcare costs) will need 104% of their benefits to cover medical premiums and out-of-pocket expenses.

A 65-year-old couple will need 84% of Social Security benefits for healthcare

A 45-year-old couple will need 129%

Challenges for women

Women live on average two years longer than men and tend to marry men two years older. Expected lifetime healthcare costs for a healthy 63-year-old woman (retiring at 65, living to age 90) are projected to be $560,325. That’s 27% more than a 65-year-old male (retiring at 65, living to 88) at $442,563.

IRMAA surcharges

Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) policy assigns surcharges to Part B and Part D recipients based on their modified adjusted gross income (MAGI). The estimated lifetime Medicare premiums for a healthy 55-year-old woman are:

MAGI Less Than $136k: $306,003
MAGI Between $136k and $169k: $411,498 (34% increase)
MAGI Between $169k and $212k: $570,587 (86%)
MAGI Between $212k and $255k: $729,674 (138%)
MAGI Between $255k and $609k: $888,764 (190%)
MAGI Above $609k: $941,793 (208%)

End-of-life care

Traditional Medicare premiums and out-of-pocket expenses generally do not address end-of-life long-term care needs, including care in a skilled nursing or assisted living facility or at home.

The national average cost for a year of care in a skilled nursing facility in 2036 is estimated to reach $155,126 by 2036. Cost estimates range from $233,180 in New York State to $111,931 in Texas. The national average cost for a year of home health care (44 hours/week) is expected to reach $141,637 in 2046. Estimates range from $194,664 in Oregon to $81,043 in Louisiana.

Private Credit Anxiety and the Bermuda Triangle

Posted on March 3, 2026 by Kerry Pechter -

A cascade of news articles on Bloomberg, in the Financial Times, and other respected financial news sources has focused on the potential for significant defaults and failures in the opaque, illiquid world of high-yield private credit. A spike in withdrawals from private credit funds managed by Blue Owl and Blackstone has spooked investors across the private-credit sector.

Blue Owl stock was reported down by 9% yesterday, according to the New York Times. Blue Owl owns Kuvare Asset Management and provides investment management services to Kuvare Holding’s life insurers, Guaranty Income Life and United Life. Kuvare also has a reinsurer in Bermuda.

Investment firms with similar strategies have been feeling Blue Owl’s pain for more than a year. Apollo, the private asset manager tied to life insurer Athene, has seen its share price drop to $104 this week from $177 in December 2024. KKR, which controls the Global Atlantic life insurers, has seen its share price drop to $90 this week from $165 in January 2025.

F&G Annuities & Life CEO Chris Blunt

Then there’s Blackstone and its strategic partner, F&G Annuities & Life (F&G). Bloomberg reported this week that Blackstone Inc. is allowing investors to redeem a record 7.9% of shares from its flagship private credit fund, calling the redemptions “the latest sign of unease in an industry that’s faced a wave of withdrawals.”

Blackstone has long managed private credit assets for F&G, whose CEO, Chris Blunt, recently expressed his frustration at the disconnect between F&G’s strong fundamentals and its low stock price. Blunt said shares of the company are trading at roughly 62% of book value. That outlook doesn’t match what he called F&G’s “pristine fixed book” of assets. F&G’s liabilities include 55% fixed indexed annuities and 11% fixed-rate annuities, which have surrender penalties and market-value adjustments to protect them from sudden withdrawals by contract owners.

“The stock is trading as though there are billions and billions of credit losses coming,” Blunt said at his company’s earnings presentation in February. “It’s pretty inexplicable to me.” F&G’s shares closed Tuesday at about $22, or down more than half from $48 in November 2024.

The word on The Street is that investors are bailing out of private lending funds and selling the shares of private lenders because of an anticipated bust in the A.I. business. The world has over-invested in A.I.-related business, goes the conventional wisdom, and a lot of recipients of leveraged loans mid-could fail when the inevitable correction comes.

The fact that 20% of F&G’s assets are in private credit, and that Blackstone runs its private credit assets, could explain the low value of F&G stock.

From F&G Annuities & Life February 2026 Presentation, p. 26.

But there could be a deeper reason why the share prices of prominent companies in this sector have fallen. Asset managers have ramped up the leverage of the annuity-issuing life insurers that they own. Higher leverage means higher returns-on-equity. But it also means higher risk.

Which brings us to the Bermuda Triangle strategy. That strategy (as regular readers of RIJ know) involves three types of companies working in concert—an alternative asset manager, a life insurer that issues fixed-rate or fixed indexed annuities, and a reinsurer that assumes the life insurer’s risk in a way (“funds withheld reinsurance” or “modified coinsurance”) that leaves the asset manager in charge of the life insurer’s assets.

The annuity sales provide low-cost revenues, the revenues help the life insurers buy investment-grade tranches of bundles of private loans from the asset managers, and the reinsurance lightens the capital requirements that are a drag on profits.

All of the asset managers and life insurers mentioned above happen to have big presences in the Bermuda Triangle. As noted, F&G is a major issuer of fixed deferred annuities, 20% of its assets are in private credit (see chart at left), and it has used “flow reinsurance” to move liabilities off its own balance sheet and onto the balance sheet of an affiliated reinsurer in Bermuda, F&G Life Re.

(F&G recently announced the sale of F&G Life Re to newly-created Ancient Financial, which will change the reinsurer’s name to Ancient Re. Ancient Financial’s new CEO, Erich Schram, previously ran Blackstone’s Insurance Portfolios, a position that Blunt once held at Blackstone.)

According to a recent statutory filing in its home state of Iowa, F&G runs a 2.4% surplus on liabilities of $71.4 billion, compared with a life insurance industry average of 7.2% (in 2024). Of $12.5 billion in annuity sales, it reinsured $9.3 billion, thus vastly reducing its reported new liabilities for the year. Using “funds withheld” and “modified coinsurance,” it is able to move the liabilities off its balance sheet while keeping its fee-generating assets under management.

Running a “capital light” annuity business, which is designed to sound attractive to investors, is just another way of describing a highly leveraged business. Insurance is by definition a leveraged business: it borrows from policyholders to invest. But the rising leverage of the Bermuda Triangle life/annuity companies has been worrying the Federal Insurance Office, Federal Reserve economists, a former chair of the Senate Banking Committee, the International Monetary Fund, and the Bank of International Settlements for years.

They worry because leverage is the high blood pressure of the financial industry. It helps ripen conditions for the “strokes” known as credit crises. It’s a strange kind of high blood pressure that’s contagious because of the interdependence of the big investment managers.

Neither state insurance commissions, whose states compete to attract life insurers, or their trade group, the National Association of Insurance Commissioners, which is not a regulator per se and has no enforcement power, have shown much serious interest in this.

Bulletin Board

Posted on March 3, 2026 by Editorial Staff -

Shake-up at top of the Department of Labor

Two top aides to Labor Secretary Lori Chavez-DeRemer were forced out Monday night amid an internal investigation into claims of misconduct by top officials in the department, the New York Times and New York Post reported this week.

Ms. Chavez-DeRemer’s chief of staff, Jihun Han, and deputy chief of staff, Rebecca Wright, were given 24 hours to resign after the White House told Labor Department leaders to fire them, one of the people said.

Their departure was reported earlier Tuesday by The New York Post. The Post in January reported on a whistle-blower complaint with the inspector general’s office that claimed Ms. Chavez-DeRemer drank on the job, that she was having an affair with a subordinate — a member of her security detail — and that she used department resources for personal trips.

Mr. Han and Ms. Wright could not be reached for comment, the news report said. The White House did not respond to a request for comment.

Busches settle their lawsuit against Pacific Life

NASCAR champion Kyle Busch and his wife, Samantha, have reached a confidential settlement with Pacific Life Insurance in their lawsuit alleging they lost nearly $8.6 million through an indexed universal life insurance strategy that was misleadingly sold to them, ThinkAdvisor reported today.

In a joint settlement notice filed last week, the parties notified a judge in the U.S. District Court for the Western District of North Carolina that they had reached the agreement and were documenting and finalizing settlement papers. They intended to file a stipulation or motion to dismiss the case in the following 30 days, with all parties bearing their own fees and costs.

PRT market finished 2025 on a high note

The U.S. Pension Risk Transfer (PRT) market closed 2025 on a strong note, with fourth-quarter premium estimated at approximately $28 billion, making it one of the largest quarters on record. The final quarter saw strong activity in jumbo transactions, with three transactions completed during this time contributing to an expected total of six jumbo transactions for the full year. This helped lift overall volumes and reinforce momentum following a lighter first half of the year.

The second half of 2025 showed an uptick in activity, driven in part by a continued rise in buy-in transactions. This trend continued throughout the year, with buy-in sales finishing well above historical levels as plan sponsors increasingly look to evolve their strategies and secure pricing earlier in their de-risking and termination timelines.

Overall, full-year 2025 PRT premium is estimated to reach approximately $48 billion, positioning the year among the most active on record.

ICI and DCALTA to collaborate on private assets in 401(k)s

The Investment Company Institute (ICI), the leading association representing the asset management industry and the individual investors they serve, is launching a strategic collaboration with the Defined Contribution Alternatives Association (DCALTA) to advance education, research, and policy engagement on the role of alternative assets within defined contribution retirement plans.

Through investor-focused research and analysis, conferences and events, and sustained engagement with policymakers and plan sponsors, ICI and DCALTA will work together to advance the national dialogue on the benefits associated with expanded access to private assets in retirement plans.

DCALTA put out its first newsletter in the spring of 2022. Its website carries the message, “The benefits to defined contribution (DC) participants are clear: the inclusion of a modest allocation of diversified, professionally managed alternative assets within a multi-asset portfolio, will enhance retirement security.”

Pacific Life Re in longevity swap with Dutch unit of Aegon

Pacific Life Re, a leader in the global life reinsurance industry, has announced the completion of a €1.3bn longevity swap reinsurance agreement with Aegon Levensverzekering N.V., part of the a.s.r. group, further strengthening its presence and commitment to the Dutch market.

This transaction covers a portion of the defined benefit pensions included in a pension buy‑out and marks Pacific Life Re’s second longevity reinsurance transaction in the Netherlands.

Jouke Hottinga, Managing Director, Group Strategy & Balance Sheet Management at a.s.r. said in a release, “This reinsurance transaction effectively mitigates our longevity exposure and is fully aligned with our continued objective of optimizing the balance sheet.”

Vanessa HoVon, Managing Director, Savings & Retirement for Europe & Americas at Pacific Life Re said, “We are delighted to partner with a.s.r. on this significant transaction, our first Dutch deal covering defined benefit liabilities for both pensioners and deferred members.” The global law firm Hogan Lovells supported the deal.

Symetra enhances FIA features

Symetra Life Insurance Company announced several new enhancements to its suite of fixed indexed annuities, including new crediting strategies, improved certainty and flexibility, and the addition of the Franklin Large Cap Value 15% ER Index.

Symetra Edge Elite, Symetra Edge Frontier and Symetra Edge Revolution are single-premium fixed indexed annuities (FIAs) that provide growth potential based on performance of market indexes. With the option to allocate across different indexed account options, each with multiple crediting options, they offer clients various crediting methods while maintaining principal protection.

Key enhancements include

The new Franklin Large Cap Value 15% ER Index delivers a disciplined approach to value investing, designed specifically for fixed indexed annuities. This index utilizes the actively managed Putnam Focused Large Cap Value ETF (PVAL) for equity exposure and applies a 15% annual volatility target to balance long-term growth potential with daily risk control.

The JPMorgan Efficiente 5 Index is now available utilizing a trigger strategy, meaning that any positive return in the index results will be credited at the stated trigger rate at the end of the interest term. All four indexes within Symetra’s suite of fixed indexed annuities – including the Nasdaq 100® Index and S&P 500® Index — now offer a trigger crediting method.
Clients can access up to 15% of their contract value each contract year without withdrawal charges and now can choose to auto-rebalance their accounts to a given allocation on each contract anniversary.

Australia’s ‘Super’ Gets a Presidential Shout-Out

Posted on March 3, 2026 by Kerry Pechter -

U.S. President Donald Trump caused a reported “retirement savings seismic event” when, during a press conference at the Roosevelt Room of the White House last December, he said, “We’re looking at [Australia’s Superannuation system, or ‘Super’] very seriously” as an option for U.S. retirement system reform.

It’s a “good” system that has “worked out well” for Australia, the president said from his official lectern, backdropped by a painting of President Theodore Roosevelt on a black horse rampant. The president glanced at billionaire Michael Dell, who was present to announce his contribution to the Trump Account savings program for children, as if to confirm that description of the Australian system.

Given the perennial suspense in the U.S. over Social Security’s looming insolvency and the coverage shortfalls of our defined contribution system, the president’s passing comment sparked a flurry of news coverage in the U.S. and in Australia.

But the comment, somewhat glib given the trillions of dollars in savings that hang in the balance, raised as many questions as it answered.

“It remains unclear in January how much significance the retirement industry should attach to the comments,” wrote James Van Bramer in PlanSponsor magazine. “Australia, for all its success, really can’t help us,” wrote Alicia Munnell of the Center for Retirement Research at Boston College, in a new research paper.

The bragging point of the Australian retirement system is that Aussies have saved a collective A$4.5 trillion (US$3.15 trillion) worth of assets in 112 diversified Superannuation (“Super”) funds, of which the two biggest, Australian Retirement Trust (ART) and AustralianSuper (AusSuper), dwarf the rest. About 20% of Australia’s Super savings is invested in the U.S.

Much to the frustration of the Australian government, the sponsors of Super funds have been slow to develop and offer tools—annuities or annuity-like “decumulation” products—with which retired participants can they don’t spend their savings too fast (and run low in old age) or too slow (and deny themselves pleasures).

Compare and contrast

The Australian system mashes up features of our Social Security system and our 401(k) defined contribution system. In the U.S., we have a mandatory 12% payroll tax for Social Security. In Australia, employers are required to contribute 12% of each employee’s pay to a Super fund.

As in our 401(k) system, each worker has an account in one or more Super, and the values of their accounts rise or fall with the performance of their investments. Unlike 401(k) participants, Australians can’t choose their own funds or get unrestricted access their money before age 65. Like Americans, Australians get a tax break (a flat 15%) on their contributions. There’s a 15% tax on the earnings of the Super funds during the accumulation stage. There is no tax on withdrawals after age 60. In retirement, they have to take a rising percentage of their savings (ranging from 4% at age 60 to 14% at age 95) out of their Supers each year.

Australia has an Age Pension that goes to retirees who demonstrate need. The maximum Age pension is the equivalent of about US$21,500 for single people and US$32,300 for couples. About 42% of Australians qualify for a full Age Pension and an additional 28% qualify for a partial Age Pension. Surveys have shown that middle-class Australians estimate that they need an income in retirement that’s at least US$7,000 to US$10,000 in excess of their Age Pension.

Australia is of several countries that followed economists’ recommendations in the 1990s to gradually switch from tax-financed “pay-as-you-go” government-run retirement systems like Social Security to mandatory (not voluntary, as in the U.S.) defined contribution (DC) systems where savings are pooled into large investment funds (non-profit or profit-seeking). These funds hire professional managers. Boards of trustees (not employers, as in the U.S.) serve as the fiduciaries. President Trump seems to think Australia’s version of this would work well in the U.S.

Vanguard offers a superannuation fund in Australia, with a sliver of the market.

Guaranteed or not

In February, a notice from the Australian government nudged, and not for the first time, Super fund sponsors to start offering their participants optional decumulation tools that would help them spread their CDC assets across their entire lifetimes—as opposed to over-spending and possibly running out of money or underspending and not enjoying retirement as much as they could.

There’s an “ever-present conversation in Australia about how to produce annuitized income from piles of assets and protects retirees from the financial risks associated with holding stocks and bonds,” writes Alicia Munnell of the Center for Retirement Research in a new working paper.

So far, the second largest Super fund, Australia Retirement Trust (ART) has begun offering its participants a kind of “tontine.”

ART’s product is called “Lifetime Pension.” It works like a tontine—a pooled investment fund that offers a variable income to retirees that aims to, but isn’t guaranteed to, furnish its members with an income for life. The underlying assets are professionally managed and invested in a diversified portfolio.

Brnic Van Wyk

The purest kind of tontine lets a group of contemporaries share their investment risk during the accumulation stage by pooling their savings and then, in retirement, lets them pool their longevity risk by having the members who die relinquish their still-undistributed savings to the survivors.

Lifetime Pension is a variation on that theme. Unlike a pure tontine, its members don’t forfeit their savings when they die. “Our product has a death benefit feature. Without the DB we could give more income. But without the DB we couldn’t sell the product at all. If a bus hits you, your family gets your unpaid balance back,” an ART spokesperson, Brnic Van Wyk, told RIJ recently.

The largest Super, AustralianSuper (AusSuper) announced in 2024 that it was developing a guaranteed income product with TAL, a subsidiary of Japan’s Dai-Ichi Life. Some funds are looking at “longevity risk swaps” where, for a fee, an insurer assumes the risk that some members of a given population of retirees might live longer than expected and run out of savings.

According to the Australian regulators’ industry-wide survey, Van Wyk said, 84% of Australian retirees’ assets are in “account-based pensions” outside the Super funds. These aren’t actually pensions but consist of accounts that are providing retirement income. Money in account-based pensions is subject to required annual minimum withdrawals ranging from 4% at age 60 to 14% at age 95. Of the 16% of retirees who own insured annuities, most own fixed-term annuities.

Aaron Minney, Challenger

“If there were no Age Pension, more people would be asking for guaranteed income products,” said Aaron Minney, head of Retirement Income Research at Challenger, Australia’s dominant underwriter of annuities.

Slow-walking lifetime income

Australia’s Superannuation system “is a good accumulation system but not much thought has been given to the architecture for decumulation,” said Stephen Huppert, actuary and retirement income specialist at Optimum Pensions which has designed an investment-linked annuity for the Australian market.

“The timing needs adjustment,” Huppert told RIJ. The government proposed a Comprehensive Income Products for Retirement (CIPR) in December 2016 and dropped it by 2019. Pushback came from the superannuation fund trustees. The government’s Retirement Income Covenant of 2022 requires trustees to help members manage longevity risk. But it doesn’t mandate products. In February of this year, the government published a Best Practice Principles that recommends lifetime income products as a voluntary best practice.”

Explanations for the low adoption of income solutions—by Super sponsors and retirees—are several. Like Americans, Australian prefer to keep their savings liquid rather than committing them to an illiquid annuity contract.

The Super fund sponsors have thin budgets for new product development and see little participant demand. Sponsors have been slow-walking the adoption of lifetime income tools for several years. They have a natural disincentive to seeing their AUMs shrink by decumulation—especially when there’s little demand for lifetime income products.

“It’s hard to make a business case for developing and launching a new product that won’t have a good take-up rate,” said Van Wyk of ART. Financial advisers in Australia are no more keen than their U.S. counterparties to surrender assets to an insurance company. Then there’s moral hazard: If Australian retirees run low on income in old age, they can fall back on the means-tested taxpayer-funded Age Pension.

Stephen Huppert

“Despite a clear demographic need ahead, [lifetime income products] aren’t a priority for most funds,” Huppert said.

“Our surveys show that 58% of Australians are not even aware of annuities,” Challenger’s Minney told RIJ. “Once they become aware, I expect at least 10% of flows (out of Supers) to go into lifetime income streams, with about 3% to 4% into guaranteed life annuities. If we have another ‘black swan’ event like 2008, then I think we’ll see a big switch from investments to guaranteed solutions.”

News from the Bermuda Triangle

Posted on February 25, 2026 by Editorial Staff -

Kuvare distances itself from Blue Owl

Kuvare Holdings has issued a statement to address various business media reports published since February 19, which focus on matters regarding Kuvare’s commercial relationship with Blue Owl Capital. According to the statement:

“Contrary to media reports originating on Bloomberg (February 19, 2026, and purportedly, though wrongly, “corrected” in multiple reports published February 20, 2026), Blue Owl does not own Kuvare Holdings, parent entity to a group of wholly owned life insurance and reinsurance companies (collectively, “Kuvare”). Rather, Blue Owl works for Kuvare, as an independent asset manager to Kuvare’s life insurance carriers, including Guaranty Income Life Insurance Company, United Life Insurance Company, and Lincoln Benefit Life Company, as well as reinsurer Kuvare Life Re (Bermuda) (the “Kuvare Carriers”).

“This relationship began in 2024, when Blue Owl acquired Kuvare’s former affiliated asset management division, known as “Kuvare Asset Management.” Kuvare Asset Management was merely one of Kuvare’s companies, and it was the only business sold to Blue Owl. This limited divestiture did not change Kuvare’s full ownership and control of the Kuvare Carriers.

“Bloomberg, followed by various media outlets which appear to have sourced stories predicated on Bloomberg’s inaccuracies, inexplicably fail to recognize the distinction between Kuvare Asset Management, which Blue Owl bought to complement its insurance investing expertise, and the broader Kuvare Holdings organization—which Blue Owl most certainly did not acquire. For completeness, it may be noted that Blue Owl provided Kuvare with financial capital support ($250m) at the time it became a Kuvare asset manager, via a 100% passive investment conferring no voting or control rights of any kind over Kuvare.

“Today, Blue Owl’s relationship with Kuvare is simply as a third-party investment adviser to the Kuvare Carriers. Blue Owl’s investment professionals, working under customary investment management agreements, source and originate private assets for the Kuvare Carriers’ portfolios.”

Cayman covets Bermuda’s reinsurance success

The booming reinsurance industry in the Cayman Islands has expanded dramatically since 2020 — both in the number of carriers and the assets they control, according to industry group Cayman Finance.

The number of reinsurance companies operating in the Cayman Islands has nearly doubled from 58 in 2020 to 113 at the end of 2025, reported Cayman Finance, an organization representing the financial services industry in the British Overseas Territory.

Total reinsurance assets have more than quadrupled over five years, from $23 billion in 2020 to $101 billion at the end of 2025, according to Cayman Finance, citing figures from the Cayman Islands Monetary Authority.

The industry group also said total premiums in the reinsurance sector rose to $30.2 billion at the end of 2025, up nearly 225% from $9.3 billion in 2020.

Cayman Finance emphasized the outsized role that the United States plays in this market, noting that 90% of reinsurance business flowing into the jurisdiction originated from the U.S. and Canada.

The industry group attributed the growth to a shortage of domestic capital in the life and annuity industry in those countries, fueling demand for reinsurance in overseas jurisdictions that can tap international capital to support the North American insurance market. The Cayman Islands have become an increasingly popular offshore reinsurance destination in part because its capital requirements are generally lower that in the U.S., and even other offshore jurisdictions such as Bermuda.

Rithm Capital buys CL Life and Crestline Management to enter Bermuda Triangle

CL Life and Annuity Insurance Company’s B++ (Good) financial strength rating and bbb+ (Good) long-term issuer credit rating have been affirmed by AM Best. The ratings agency removed CL Life from “under review with developing implications” and gave it a stable outlook.

The ratings reflect CL Life’s strong balance sheet, adequate operating performance, neutral business profile, and appropriate enterprise risk management (ERM), an AM Best release said.

The improvement came after Rithm Capital Corp. (Rithm), a global alternative asset manager, agreed to acquire CL Life and its ultimate parent, Crestline Management, L.P. (Crestline), effective Dec. 1, 2025. Rithm said it will expand its direct lending, insurance and reinsurance businesses.

Crestline’s senior management team is expected to stay on. AM Best expects CL Life to “continue to execute its strategic business plan in the annuity space with positive premium growth and surplus growth needed to support an expanding book of business.”

Projected focus of invested assets will be in investment-grade rated corporate credit, as well as first lien real estate mortgages, which are considered higher risk as compared with the industry average.

CL Life derives its profit from a combination of net investment income and ceding commissions. The company currently is estimated to have modest operating earnings as of year-end 2025 results. CL Life will continue to offer muti-year guarantee annuity products, along with fixed index annuity products with select distributors, while reinsuring most of its production to a strongly capitalized offshore captive in the Cayman Islands.

Rithm was founded in 2013 under Fortress Investment Group to enter the mortgage servicing rights (MSR) business. In 2023, Rithm acquired Sculptor Capital Management, a global alternative asset manager with $33 billion in assets under management at the time of acquisition.

In acquiring Crestline Management, Rithm added $17 billion in assets to raise AUM past $102 billion. Rithm Capital is the parent of multichannel lender Newrez.

Teachers’ unions ask SEC to probe Apollo over Epstein contacts

The American Federation of Teachers (AFT) and the American Association of University Professors asked the Securities and Exchange Commission to EC’s enforcement director Margaret Ryan to investigate Apollo Global Management for its “lack of candor” regarding its founders’ dealings with the late sex offender Jeffrey Epstein.

Apollo Global Management’s communications to investors “give an inaccurate and incomplete picture of the firm and its partners’ connections to [sex offender Jeffrey] Epstein,” according to a letter sent to the Securities and Exchange Commission by two U.S. teachers’ unions whose pensions have exposure to Apollo.

Epstein died in jail in 2019, an apparent suicide, while awaiting trial on federal charges of trafficking minors for sex. AFT said its members have $27.5bn in total capital commitments to Apollo funds through their pensions.

Apollo co-founder Leon Black stepped down as chief executive in 2021 after the law firm Dechert reported that he’d paid $158M to Epstein between 2012 and 2017 for advice on trust and estate planning, tax, artwork, philanthropy, Black’s yacht and plane and the operation of Black’s family office.

Who Really Owns Your Investments?

Posted on February 25, 2026 by David Macchia -

For decades, investors have been taught to focus on asset allocation, diversification, and long-term market returns. Advisors spend enormous time debating portfolio construction, rebalancing strategies, and investment selection. Yet one foundational question is rarely asked—by investors or their advisors:

What does it actually mean to “own” an investment in today’s financial system?

The answer is not intuitive, and it has little resemblance to how people own a home, a bank account, or a piece of real estate. Modern securities ownership is governed by a legal framework—largely invisible to investors—that shapes rights, priorities, and outcomes when financial institutions come under stress.

Understanding that framework is not about predicting crisis or sowing fear. It is about understanding structure. That structure is found in Article 8 of the Uniform Commercial Code (UCC) and its interaction with U.S. bankruptcy law.

The assumption most investors make

Ask a typical investor who owns the stocks in their brokerage or retirement account, and the answer is immediate: “I do.” This assumption feels reasonable. Account statements list securities by name. Online dashboards show balances updating in real time. Dividends arrive as expected. Voting materials appear in the mail. Everything about the experience suggests direct ownership. Legally, however, that is not how modern securities are held.

UCC Article 8 and the concept of the “security entitlement”

Under UCC Article 8, most publicly traded securities in the United States are held through a system of securities intermediaries—broker-dealers, custodians, clearing brokers, and clearinghouses. Rather than owning a specific stock or bond directly, investors hold what the law calls a security entitlement.

A security entitlement is a bundle of contractual and property rights created by book entry—a credit recorded on the books of a securities intermediary. It is not ownership of a specific, identifiable share.

This distinction is critical. Article 8 explicitly states that an entitlement holder does not have a property interest in any particular financial asset held by the intermediary. Instead, investors hold a pro-rata interest in a pooled mass of securities.

There are no name-tagged shares. This structure exists because modern markets require speed, scale, and fungibility. Millions of trades occur daily. Securities must be easily transferable, netted, pledged, and settled. The intermediated system makes that possible. Under normal market conditions, it works extremely well.

The intermediation chain

To understand how security entitlements function, it helps to visualize the chain:

The investor holds an account at a broker-dealer
The broker-dealer works with a custodian or clearing broker
Those firms interface with clearinghouses
Securities are immobilized at a central securities depository and transferred electronically

Each layer maintains records rather than physical certificates. The system allows global markets to function efficiently, but it also means that investor rights are indirect. The investor’s claim is against their intermediary—not against the issuer of the security itself.

Why legal structure matters during stress

In ordinary times, this distinction has little practical impact. Trades settle. Statements reconcile. Markets function. But the legal structure becomes critical when a financial intermediary fails.

Under UCC Article 8, if a securities intermediary does not hold sufficient assets to satisfy all security entitlements, entitlement holders share pro rata in whatever remains.

No investor has priority based on ownership of specific securities, because no such ownership exists. This is where UCC Article 8 intersects with U.S. bankruptcy law, and where confusion often arises.

The priority “waterfall” explained

The term “waterfall” does not appear in the statutes themselves. It is a practical description of how claims are resolved when a broker-dealer or major financial intermediary becomes insolvent.

U.S. bankruptcy law provides special safe-harbor protections for certain financial contracts, including:

Derivatives and swaps
Repurchase (repo) agreements
Margin and settlement payments
Master netting agreements

These protections allow counterparties to these contracts—often large financial institutions—to terminate, net, and seize collateral immediately, without being subject to the automatic stay that applies in most bankruptcies.

Clearinghouses play a central role in this process. They act quickly to contain risk, enforce margin requirements, and allocate losses according to pre-approved rulebooks. This is not discretionary behavior; it is mandated by regulation and contract.

The result is a legally defined order of operations:

Clearing and netting occur
Collateral is applied to secured and derivatives-related claims
Residual assets remain, if any
Investors share what is left on a pro-rata basis

This is not a conspiracy, nor is it hidden. It is explicitly embedded in law.

This is not alarmism

Understanding this framework does not mean that investors should expect losses, confiscation, or systemic collapse. Financial markets have endured stress events before, and most investors emerge without incident. The point is more subtle and more practical: Investment outcomes depend not only on market performance, but also on legal structure. Account balances do not exist in a vacuum. They sit within a hierarchy of rights, contracts, and priorities that only become visible during stress.

Why this matters for advisors

For financial advisors, this discussion is not about changing how markets work. It is about broadening how retirement risk is understood. Traditional portfolio theory focuses on:

Market risk
Volatility
Sequence of returns
Diversification across asset classes

These are important considerations. But they assume that liquidity and legal access to assets will always be available when needed. Advisors increasingly recognize that retirement success is not measured by peak account values, but by reliable income over time. Nobel laureate Robert Merton has emphasized that retirees do not consume wealth—they consume income. That shift in thinking naturally raises questions about structure, not just returns.

Diversifying legal structures, not just investments

One practical implication of UCC Article 8 is that many retirement strategies now intentionally combine assets governed by different legal regimes. Market-based assets held through brokerage accounts are powerful tools for growth. They provide liquidity, upside potential, and flexibility.

Contractual income instruments—such as annuities governed by state insurance law—operate differently. They create direct contractual obligations backed by an insurer’s general account and supported by statutory policyholder protections. They do not rely on the securities intermediation chain.

This distinction does not make one approach “better” than the other. It makes them complementary. A resilient retirement plan recognizes that growth assets and income contracts serve different purposes and are governed by different legal frameworks.

What advisors should communicate to clients

This topic must be handled carefully. Alarmist language is neither accurate nor helpful. The goal is clarity, not fear. Advisors can responsibly explain that:

Brokerage accounts provide contractual claims, not direct ownership of specific securities
Legal priority rules exist and function as designed
These rules matter most under stress, not in everyday markets
Retirement planning benefits from balancing growth potential with contractual income certainty

Clients do not need a law degree to appreciate the takeaway: Structure matters.

A more complete definition of fiduciary care

As fiduciary standards continue to evolve, advisors are increasingly expected to address not only performance risk, but outcome risk. Outcome risk includes:

Market timing risk
Longevity risk
Behavioral risk
And yes—structural risk

UCC Article 8 is not a flaw in the system. It is the system. Understanding it allows advisors to design plans that are more robust, more transparent, and better aligned with how modern finance actually works.

Conclusion

The modern investment system is highly sophisticated, deeply interconnected, and legally precise. Investors do not directly own most securities in the way they assume—but that does not mean the system is broken. It means that ownership is intermediated, priorities are pre-defined, and outcomes depend on both market performance and legal structure.

For advisors, acknowledging this reality is not about fear. It is about professionalism.

Markets remain essential tools for growth.
Contracts remain essential tools for income.

The most effective retirement strategies understand the role of both.

David Macchia is an entrepreneur, author, and retirement-income innovator with more than three decades of experience in financial services. He is the founder of Wealth2k^®, and the creator of the Income for Life Model®, one of the first technology-based frameworks for retirement income planning adopted by thousands of financial advisors. Macchia has been a frequent speaker and commentator on retirement security, income planning, and the evolving structure of U.S. financial markets. His work focuses on helping advisors and investors shift the retirement conversation from account balances to sustainable income outcomes.

Bulletin Board

Posted on February 3, 2026 by Editorial Staff -

Sale of PHL Variable blocks ‘no longer feasible’

Connecticut regulators say a potential sale of troubled PHL Variable Insurance Co. life blocks is no longer feasible, and liquidation is the next step. Interim Insurance Commissioner Josh Hershman announced the change in strategy in the latest rehabilitation report released Dec. 31.

“The Companies do not have the assets that would be necessary to transfer to a buyer or reinsurer any blocks of business without causing other policyholders to receive less than what they would receive from the guaranty associations in a conventional liquidation,” the report reads.

Former commissioner and rehabilitator Andrew Mais had been working toward a sale of PHL Variable blocks for months before abruptly retiring on Nov. 28. A decision on a buyer was due on Dec. 31.

The sales effort was a crucial part of a delayed overall rehabilitation plan for PHL Variable and hinged on non-universal-life blocks being attractive enough to buyers. In a Nov. 20 status report, Mais said the rehabilitator also “expects to file an outline of the terms of a rehabilitation plan” by the end of the year.

The liquidation news generated outrage from large policyholders who have battled with Connecticut regulators for much of the past two years.

Edward S. Stone is a Greenwich, Conn., attorney for SWS Holdings, which owns two Phoenix Generations universal life policies worth $18 million in death benefits. The company has paid more than $12 million in premiums to date, court documents say.

The policies were purchased in 2006 with the intent to fund an eventual stock purchase agreement. SWS sought “full-party” status in the PHL Variable rehabilitation proceedings, but Judge Daniel J. Klau denied the request.

“The fake rehab was designed to induce lapses (more than $5 billion to date), steal from over-the-cap policyholders and go through the charade of a ‘sales process’ that was never going to result in a real sale,” Stone said Monday.

Hershman is negotiating with the National Organization of Life and Health Insurance Guaranty Associations to determine what assets may be available to provide “limited ongoing benefits” to policyholders whose policies would otherwise terminate 30 days following a liquidation order, he said in the Dec. 31 report.

Delaware Life FIA now offers Bitcoin exposure

Delaware Life Insurance Company, a Group 1001 company, has added the BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index to its fixed index annuity (FIA) portfolio, making Delaware Life “the first insurance carrier to offer an index that contains cryptocurrency,” the company said. The BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index:

Combines U.S. equities and Bitcoin in one index for diversified return potential.
Targets 12% volatility, using dynamic cash adjustments to help smooth Bitcoin’s inherent volatility.
Provides professionally managed Bitcoin exposure without the complexity of direct crypto ownership through the use of iShares Bitcoin Trust ETF (IBIT).

The BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index is available as an index option on three of Delaware Life’s products: Momentum Growth, Momentum Growth Plus, and DualTrack Income.

Corebridge FIA offers ‘modest’ Bitcoin exposure

The new Corebridge Power Select fixed indexed annuity (FIA) offers “modest” exposure to Bitcoin. It tracks the Invesco New Economy Index, which makes “dynamic allocations” to the Invesco QQQ ETF and the Invesco Galaxy Bitcoin ETF (BTCO).

The Invesco New Economy Index is available exclusively in Corebridge Power Select FIAs, which are distributed by Market Synergy Group (MSG), a large independent marketing organization, according to a Corebridge release.

Daily index adjustments balance risk and return by shifting between QQQ, Bitcoin and cash. It targets a 12.5% annual volatility level to help support more stable returns over time.

The product also offers a couple of lifetime withdrawal benefit options that reward deferral of income for up to 10 years by 10% for Lifetime Max… For Lifetime Flex, raising the value of the notional account by double the annual rate credited to the FIA before the income is started.

Ratings of insurers involved in 777 controversy are downgraded

AM Best has downgraded the Financial Strength Rating (FSR) to B (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” (Fair) from “bbb” (Good) of Atlantic Coast Life Insurance Company (Charleston, SC) and Sentinel Security Life Insurance Company (Salt Lake City, UT). Both companies are collectively referred to as A-CAP Group.

Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings. The ratings reflect A-CAP Group’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The rating downgrades are based on weakness in A-CAP Group’s business profile as manifested in the material decrease in new premium and material increase in surrenders/outflows, as well as reputational damage resulting from publicized regulatory rulings.

AM Best notes that these rulings were subsequently paused or stayed and also notes that the company has provided information that demonstrates surrenders and outflows have decreased. A-CAP Group’s primary focus is the fixed index annuity market, a dynamic and credit sensitive sector with strong long-term prospects. A-CAP Group is taking deliberate steps to rebuild and re-establish its brand presence in this competitive landscape.

The downgrades are also based on a decline in AM Best’s overall assessment of A-CAP Group’s balance sheet strength. AM Best acknowledges A-CAP Group’s pending capital raise, but also recognizes its level of illiquid assets, concentrated reinsurance leverage, which is mitigated through the use of funds held and modified coinsurance agreements, along with a recent decline in its overall capital adequacy ratios that have not fully recovered to historic levels.

The marginal ERM assessment reflects A-CAP Group’s risk culture, which has led to elevated amounts of recent litigation, an elevated risk profile related to its reinsurance relationships and assets for which the investment cash inflow does not match the cash out-flow of the insurance liabilities. A-CAP has made progress to integrate ERM into its strategy, daily operations and decision-making and enhanced its governance practices and policies.

Private Credit News

Posted on February 3, 2026 by Editorial Staff -

Dimon’s ‘cockroach’ comment sparks minor run on private credit firms

Private credit investors withdrew more than $7 billion from some of the biggest funds on Wall Street in the final months of 2025, following the bankruptcies of First Brands and Tricolor, the Financial Times reported.

Funds managed by Apollo Global Management, Ares Management, Barings, Blackstone, BlackRock’s HPS Investment Partners, Blue Owl, Cliffwater, and Oaktree all saw a rise in redemption requests, according to filings with the Securities and Exchange Commission and FT reporting.

Redemptions were running at about 5% of the value of the funds’ investment portfolios, net of debt, according to FT calculations. “Investor appetite for private credit has deteriorated in the wake of the two high-profile corporate failures,” the Financial Times said.

“Redemptions are up across the board,” one senior private credit executive told the FT. The asset class has been tarnished by the failures of First Brands and Tricolor, despite those companies largely financing themselves through loans and asset-backed securities provided or organized by banks.

Anxiety about the finances of private credit originators was sparked by JPMorgan Chase chief executive Jamie Dimon’s warning “when you see one cockroach, there are probably more” after Tricolor’s failure. have added to the investor unease. “There is a lot of fear in the air and time will tell if those fears are well founded,” Philip Hasbrouck, the co-head of Cliffwater’s asset management business, told the Financial Times.

Global watchdogs scrutinize private credit ratings

The private credit industry is facing fresh scrutiny from top global regulators over some of the ratings being assigned to debt in the $1.7 trillion market, Bloomberg News reported.

The Financial Stability Board, which monitors global risks, has high-level concerns about the potential for “ratings shopping” in private markets, where firms can seek grades on transactions from multiple providers and opt for the most favorable one, one of the people familiar with the supervisor’s work said.

Officials at the Basel-based institute are also concerned that ratings in private credit are not subject to the same rules as securitization, where safeguards introduced after the global financial crisis typically mandate the use of multiple independent credit ratings and strict management of conflict of interests.

The issues under consideration are part of the FSB’s wider work around risks in the broadly-defined ‘non-bank financial institutions’ world, which spans everything from hedge funds to asset managers and insurers, two people said. They stressed, however, that the first priority was exploring risks and vulnerabilities in the area, rather than policy recommendations.

A German pension fund whose foray into private markets led to more than €1 billion in losses, has also questioned the integrity of some credit ratings, adding to warnings over valuation risks across the booming asset class, Bloomberg reported.

The Bank of England meanwhile, will examine the role of ratings firms as part of a “system-wide exploratory scenario” exercise covering private markets, a person familiar with that work said. The stress test, announced earlier this month, aims to capture how private markets as a whole would respond to a sharp economic shock.

The results of the exercise are not expected to be published until 2027.

Egan-Jones Ratings no longer recognized by Bermuda regulator

Egan-Jones Ratings Co. has been removed from the Bermuda Monetary Authority’s list of recognized credit ratings providers, Bloomberg reported.

The regulator is no longer listing Egan-Jones among the ratings providers that can inform an insurer’s solvency capital requirements in the region, something it had done for several years beforehand. Egan-Jones had been listed alongside others such as Standard & Poor’s, Moody’s and KBRA.

“We are looking into this issue as it has just come to our attention,” an Egan-Jones spokesperson said in an emailed statement. “Our performance and compliance remain superb and we are confident we can resolve this issue and address any concerns.”

In 2024, Egan-Jones rated more than 3,000 private credit investments with about 20 analysts. The spokesperson said Egan-Jones has no clients headquartered in Bermuda at this time. The BMA did not respond to requests for comment.

In the BMA’s latest capital and solvency handbook for insurers, issued last month, the regulator names the recognized credit ratings firms as S&P, Moody’s, Fitch, AM Best, DBRS, Japan Credit Rating Agency and KBRA. The previous year, and the year before that, it had also named Egan-Jones alongside these firms.

Eldridge and Carlyle AlpInvest credit fund gets ~$1.5 billion

Eldridge and Carlyle AlpInvest announced the successful closing of Eldridge Diversified Credit Fund I (“EDCF I” or the “Fund”), the first fund in Eldridge’s diversified credit platform. Carlyle AlpInvest and its co-investors made an equity commitment to Eldridge managed vehicles which, combined with debt financing from BNP Paribas, will provide about $1.5 billion in investable capital.

EDCF I was established through a credit secondary solution anchored by the purchase of a diversified portfolio of loans and leases from Eldridge and its affiliates. The Fund’s capital base includes commitments from leading institutional investors globally.

Eldridge is an asset management and insurance holding company with over $70 billion in assets under management. Eldridge Wealth Solutions, an insurance and retirement solutions platform, is comprised of Eldridge’s wholly owned insurance companies, Security Benefit and Everly Life. Eldridge is wholly owned by Eldridge Industries.

Eldridge Capital Management and Eldridge Wealth Solutions. Eldridge Capital Management, through its subsidiaries, focuses on four investment strategies: diversified credit, GP solutions, real estate credit, and sports & entertainment.

Carlyle AlpInvest has $102 billion of assets under management and more than 700 investors as of September 30, 2025. It has invested with over 370 private equity and credit managers and committed over $111 billion across primary commitments to private equity and credit funds, secondary transactions, portfolio financings, and co-investments.

Insurance Professionals Comment on Kyle Busch Case

Posted on February 3, 2026 by Editorial Staff -

Several insurance professionals shared their views on the indexed universal life (IUL) policies that are at the center of the complaint filed by Kyle and Samantha Busch against Pacific Life Insurance Company and insurance agent Rodney A. Smith in U.S. District Court in North Carolina. You can find their comments below.

What RIJ hears: Properly designed, IUL policies can be successfully used for savings, ‘tax-free’ retirement income, estate tax planning, and/or a death benefit. But the complexity and opacity of the products, and the potential for manipulation of financial projections by unscrupulous agents, has led to their abuse. And insurance regulators’ efforts to police them have repeatedly fallen short.

Sheryl Moore, Winkintel.com

While all of the facts on the [Busch] case haven’t yet been released, many are speculating that this is a case of an agent behaving badly.

Indexed life is commonly sold as a ‘LIRP,’ or ‘Life Insurance Retirement Plan.’ This strategy typically has the agent search for the least amount of death benefit that a given premium can offer. The client pays that premium for [20] years, and then begins taking loans out of the contract, and uses the funds for their retirement income.

The problem? Indexed life [contracts] may earn less than what is communicated to the client via the illustration. It could earn zero interest. Further, depending on the type of loan taken, the loan interest rate may be greater than what the illustration communicates as well.

To boot, the client could take any number of actions that result in the illustrated values not coming to fruition, such as not paying the premium on time, taking a withdrawal, not paying their loan interest, etc.

Bobby Samuelson, lifeproductreview.com

There are a litany of errors that all contributed to the ultimate outcome [for Kyle and Samantha Busch], but none more egregious than a policy clearly configured to maximize compensation to the agent at the expense.

His analysis showed that the couple paid premium of $3.75 million over the first four policy years, but the policy charges over that period—including a large agent commission—were $4.15 million.

These policies were doomed to fail. No contract should be set up to consume nearly 90% of the premium in policy charges over the first 10 years. No contract should be left to die in a fixed account yielding 2.25% when more competitive indexed crediting options are available.

David Macchia, Wealth2k.com and Definedbenefitlife.com

As long as you manage the insurance amount (buy at least the minimum required amount of life insurance coverage), [IUL] is a great concept. But it gets spoiled by over-aggressive growth assumptions. The agent puts policies in place that are based on static assumptions, but the future is dynamic. If the contract is unmanaged, it becomes a problem. And the agents have significant control over how much they make. In this case, instead of taking a $1 million commission, he could have taken a $200,000 commission—and then Busch would have sent his friends to him.

Larry Rybka, Valmark Financial Group

Kyle Bush put $10.5 million of premium in a product that he thought would produce millions of dollars of income. He actually got something that was going to lapse within 10 years, produced no income, and burned up $8.5 million of his $10.5 million of money. IUL is the super Pinocchio of the ledger lie.

The underlying assumptions of AG-49 [The 2015 actuarial guideline published by the National Association of Insurance Commissioners that imposed stricter restrictions on policy illustrations for IUL products], even without all the gimmicks of proprietary indexes, bonuses, and multipliers… are completely unreasonable. If someone did the same thing with variable [universal life] they would be committing fraud.

Peter Gould, retired pension professional

Consumers ought to get acquainted with the idea of getting a financial second opinion from a dis-interested party – especially if considering a major purchase. You get one for a surgery. (hopefully), You check with your mechanic or consult Consumer Reports before buying a car. But you don’t get a second opinion when plunking down $10 million for an IUL Swiss Army knife? With the pitched promises, [the customer’s] greed kicks in and common sense flies out the window.

Antoine Orr, Plancorr Wealth Management

Why are loans from a life insurance company called ‘income’? It’s not income. Money from a home equity loan isn’t called income, so why are we doing it with life insurance? When the agent positions the loans—against a policy’s cash value—as tax-free income, the sales pitch obscures the cost of the loans. The cash value is eroded by the interest charged on the loans, as well as by the premiums for maintaining the life insurance benefit, and by any residual home office fees and agent compensation. “Eventually the policy loans may exceed the cash value, and you have a taxable event,” Orr told RIJ in a phone interview.

They say that IUL works if ‘structured properly.’ But no policy can be structured properly because the illustration [of future outcomes] that the client sees is only one of a thousand possible outcomes. If the illustration shows, for instance, a 4% dividend or 8% crediting rate, the policyholder thinks they will get that return from day one. The illustration itself says, “The numbers shown are not likely to occur.” Besides that, in an IUL, the insurer can change anything they want, such as the cap rates on the crediting options. The outcome can be engineered. The agent is not criminally liable.

The tax monster becomes a scare tactic. An agent might say, ‘Wouldn’t it be better to pay 6% interest on a loan of tax-free income than to pay income taxes at 40%?’ But as the debt that finances the loans accrues, the interest on the loan becomes a bigger monster than the tax on the income. And 40% is only the marginal rate.

For most people, the effective tax rate will be closer to 20%. Life insurance can be a great thing when used as an offset of estate taxes. Ray Croc (founder of McDonald’s) did not buy life insurance to build wealth. He bought life insurance to protect the wealth he already built from estate taxes.

Barry Flagg, Veralytics.com

The Kyle Busch case isn’t an isolated example of ‘an agent behaving badly.’ The current regulatory regime rewards the reckless and punishes the prudent. Almost a dozen other insurers and countless other agents are defendants in similar complaints.

Specifically, NAIC Illustration Model Regulations permit agents, brokers, and insurers to ‘quote’ low premiums and project high growth, giving the appearance of low costs. Instead, they charge high costs without disclosing them–and without disclosing the high risk of future ‘premium calls’ for more than the originally quoted premiums, or the risk of total loss due to policy lapse even if all originally ‘quoted’ premiums are paid. NAIC Illustration Model Regulations permit what would be considered fraud in any other segment of the financial services business.

While NAIC Illustration Model Regulations were well‑intended, they are flawed to the core, have been re‑opened three times already in less than 10 years with ‘whac‑a‑mole’ attempts (Actuarial Guidelines 49, 49A, 49B, and 49C) to fix the problem. NAIC Illustration Model Regulation need to be retired in favor of ‘Clients’ Best Interest’ rules.

Tom Love, Colton Groome Financial

It’s not just a desire to avoid taxes that motivates the purchase of IUL policies. Nothing on the planet can touch the income shown from some of these products when using a participating loan and aggressive design assumptions (that will never pan out).

The agent controls the framing of the narrative. The pitch is simple and solves all the client’s problems in one bucket. It’s a well-rehearsed story that comes out smooth as silk:

No market risk!
Look at these historical returns!
Tax-free retirement income that can’t be matched by anything else!
No contribution limits!

A rigged comparison will give the client the impression that the IUL is a fantastic solution that is infinitely better than the alternative. The message hits multiple emotional triggers: Aversion to loss, certainty (of retirement income), control of the future, simplicity, exclusivity (IUL is marketed as a secret of the rich), etc. People make decisions and take action when emotionally engaged.

Even worse today: Agents are making sales presentations electronically and using non-compliant software tools that leave no digital or paper trail. So, the agents can show and say anything! A group of consumers will get screwed over but proving any wrongdoing will be an uphill battle.

Pacific Life’s Motion to Dismiss the Busch’s Suit: Excerpts

Posted on February 3, 2026 by Editorial Staff -

On January 22, 2026, Pacific Life’s attorneys, Carlton Fields in Washington, D.C. and Parker Poe Bernstein Adams & Bernstein in Raleigh, NC, filed a motion to dismiss Kyle and Samantha Busch’s complaint against Pacific Life in U.S. District Court, Western District of North Carolina, Statesville Division.

Below are excerpts from that motion (bold-face emphasis added):

Surrounded by their own team of financial and legal advisors, the Busches applied for multiple high-dollar life insurance policies from Pacific Life, attesting that each policy “as applied for” would “meet [their] insurance needs and financial objectives” based on their “income, net worth,” and other factors. [See infra p. 7.]

Plaintiffs agreed that they and their producer, not Pacific Life, were “responsible for ensuring that the policy meets [their] insurance needs and financial objectives.” [Id.]

Plaintiffs signed policy illustrations indicating they intended to pay planned premiums and hold the policies over 30 years through age 70 and beyond, but instead of keeping the policies long enough to capitalize on their growth potential, Plaintiffs failed to timely pay planned premiums, failed to monitor allocation of their policy values between indexed and fixed accounts, and surrendered the policies or allowed them to lapse.

Rather than accept responsibility for their own decisions, Plaintiffs now attempt to blame their negative outcome on the UL product, a product approved by insurance regulators in every state and purported oral promises that are directly contradicted by express written disclosures they acknowledged and signed.

The Complaint here is filled with inflammatory and disingenuous rhetoric, but none of it shows any wrongful conduct by Pacific Life. For example, the Complaint includes part of an Illustration for Plaintiffs’ 2022 $25.3 million Policy [Compl. 197] and admits it fully discloses charges against premium over a 10-year period and shows the resulting cash value each year.

Yet Plaintiffs inexplicably contend they could not understand “the true economic impact of the transaction.” [Id. 9 100.] Plaintiffs repeatedly complain about a so-called “compensation-driven” policy design allegedly based on “concealed internal mechanics” [id. 9 40], commissions that they mischaracterize as “excessive compensation” [id. 9 44], and “inflated” premiums that Plaintiffs themselves established. [Id. 991 44, 78, 80, 83-84, 112.]

But given the detail in the illustrations, Plaintiffs were fully capable of evaluating the economics of their Policies, and there is no support for their allegation that they could not evaluate the “real-world operation of the policies.”

In sum, Plaintiffs made choices reflected in their Applications, Policies, and Illustrations that they desired high-face amount policies they would keep through retirement, and intended to make timely premium payments with accumulated policy values allocated to Indexed Accounts tracking the S&P 500.

Despite access to a team of their own professional advisors, Plaintiffs failed to manage their Policies and now proffer a series of baseless claims that ignore clear, repeated, and explicit disclosures that illustrated values were “not guaranteed” and that the Policies would not be “paid up” after five annual premium payments.

While the Policies were in force, Plaintiffs had as much as $90 million of valuable insurance coverage on the life of Kyle Busch while he engaged in an ultrahazardous activity (plus insurance on Ms. Busch). There is no legal basis to provide Plaintiffs with a massive windfall by refunding all of their premiums. The claims against Pacific Life should be dismissed with prejudice.

Contrary to the Complaint, nowhere do the Illustrations show withdrawals from the Policies of “tax-free income for life.” [Compl. 9 212.] Rather, the Feb. 2018 Illustration, on a non-guaranteed basis, shows tax-free loans of $710,929 being taken from the accumulated policy value beginning in policy year 19, when Kyle Busch would be 51 years old, and ending in policy year 38, when he would be 70 years old. [Ex. F-2 to F-3.]

Similarly, the Jan. 2020 Illustration, on a non-guaranteed basis, shows anticipated loans of $786,724 being taken from the accumulated policy value beginning in policy year 17, when Kyle Busch would be 51 years old, and continuing through policy year 46, when he would be 80 years old. [Ex. 1-2 to 1-3.]

Plaintiffs filed this action on October 14, 2025. The statute of limitations for negligence with respect to Plaintiffs’ 2018 and 2020 Policies expired in 2021 and 2023, respectively, three years after they received their Policies and Illustrations. Plaintiffs applied for their 2022 Policy on April 18, 2022 [Ex. E-100] and should have been aware of the alleged misrepresentations based on their four prior Policies. All of Plaintiffs’ negligence claims are time-barred. [15]

Kyle Busch’s Crash Course in IUL

Posted on February 3, 2026 by Kerry Pechter -

Did anyone wave a yellow caution flag at NASCAR legend Kyle Busch in 2017 before he and his wife, Samantha, bought a pair of multi-million-dollar Pacific Life indexed universal life insurance (IUL) policies that promised them almost $800,000 a year in tax-free retirement income?

No one did, say the couple, who are suing to recover $8.5 million of the $10 million they paid for the policies. (Pacific Life disagrees. In a January 22 motion to dismiss the case, it claims the policies’ risks were fully disclosed.)

In the civil complaint they filed three weeks ago in a North Carolina federal court (superseding the complaint they filed in state court last October), Kyle and Samantha Busch accused their insurance agent, Rodney Smith, of duping them and the carrier with abetting the agent.

Given that Busch, who turns 41 in May, is one of the winningest drivers in the history of stock-car racing, the lawsuit has sparked a wave of public and private commentary. “Indexed universal life has never had a more high-profile, celebrity-powered public relations crisis,” noted annuity marketing guru David Macchia last fall.

Kyle and Samantha Busch

“Kyle Busch put $10.5 million of premium into a product that he thought would produce millions of dollars of income,” wrote ValMark CEO Larry Rybka in an email. “He actually got something that was going to lapse within 10 years, produced no income, and burned up $8.5 million of his $10.5 million.”

IUL policies are popular life insurance policies bought for a variety of uses. They can create a tax-free death benefit for survivors, a hedge against estate taxes, or tax-free income in retirement (in the form of loans from the life insurer, backed by the cash value of the policy). An underlying fixed indexed deferred annuity drives the growth of client’s account.

Ideally, a client might pay premiums for only five to seven years. After that, if all goes as planned, the interest generated by the crediting formulas of the underlying fixed indexed deferred annuity could—it’s not guaranteed—cover any additional costs (future premiums, the cost of life insurance, the agent’s commission, and the interest on money borrowed from the carrier.

But the policy premiums were apparently applied to the FIA’s fixed-rate crediting sleeve instead of one its equity index-based sleeves, thus gaining only 2.25% per year instead of the nearly 6% illustrated by the agent.

Despite several million-dollar premium payments, that minimal rate of growth couldn’t cover the agent’s hefty front-loaded commissions and the annual expense drag of tens of millions of dollars’ worth of life insurance. The suit also accuses the agent of replacing his clients’ policies after only two years, creating a new set of commissions for himself.

In this case, according to one expert’s examination of the agent’s predictions for the performance of the Busch IUL policies, Busch and his wife were led to believe that if, at age 33 in 2018, they put $1.5 million a year into the policy for five years, the cash value of their policies would grow at the rate of almost 6% a year and yield $787,000 a year in tax-free income after Busch reached age 52—or large death benefits if he or his wife died prematurely.

“Plaintiffs believed they were securing a low-maintenance, high-return retirement investment product that would generate tax-free retirement income for life. The claim that they could stop premium payments after a few years and still receive substantial financial benefits was a gross misrepresentation of the policies’ actual performance requirements and risks,” the suit says.

But an IUL contract demands about as little maintenance as an eight-cylinder, 750-horsepower, 200-mph NASCAR stock car. And in the hands of an unskilled, or untrustworthy driver, or pit crew, such a policy can crash and burn.

How the ‘Harkin Amendment’ Enabled the ‘Bermuda Triangle’

Posted on February 3, 2026 by Kerry Pechter -

Like genetic codes, legal codes can have evolutionary implications.

When I first read the “Harkin amendment” to the 2010 Dodd-Frank financial regulation, I felt like I’d found the gene that determined the morphology of the complex financial organism that I call the “Bermuda Triangle” strategy.

Had that amendment not encoded fixed indexed annuities (FIAs) as insurance, then the strategy of buying life insurers to sell FIAs, of turning FIA liabilities into private credit, and of sending investment risk offshore, might not have attracted private equity (PE) giants the way it has.

But it did appeal to the PE firms, in a big way. Without the amendment, Wall Street firms wouldn’t be able to sell an investment-like insurance product in a legal habitat where federal watchdogs were excluded and where state regulators were much less aggressive.

This view of the “triangle” came into sharper focus when I came across two books by Columbia University law professor Katharina Pistor: “The Law of Capitalism” (Yale, 2025) and “The Code of Capital” (Princeton, 2019).

Pistor’s books helped explain how a few lines of legal code can enable (or disable) a multi-trillion-dollar segment of the financial industry, and how the Bermuda Triangle companies cherry-pick the laws and regulations that suit them.

For Pistor, laws are the “scaffolding” of the financial system and financial assets are legal constructs. Every asset that’s derived from dollars—Treasury bills, corporate bonds, stocks, mutual funds, private credit and equity, securitizations, mortgages, credit cards, cryptocurrencies, and all manner of contracts—has its own precise legal DNA.

Financial professionals write that code to their own advantage. Compliance with insurance law may be a burden for insurance company lawyers, but the law also gives insurers their special license to swap long-dated promises for ready money.

“Capitalism is a legal regime, not just an economic system,” Pistor writes. She shows how “capital is coded in law, or how specific legal modules—foremost among them property rights and collateral, contract, trust, corporate and bankruptcy law—can be deployed to turn simple objects, claims or ideas into capital.”

Neither of Pistor’s books mentions what we call the Bermuda Triangle strategy or examines the regulation of annuities. But she has a lot to say about the kinds of legal and regulatory arbitrage—the exploitation of differences between jurisdictions—that makes that strategy financially attractive.

Legal arbitrage “shows how actors with greater resources can engineer end runs around the law,” Pistor writes in her latest book. “Legal-arbitrage opportunities are particularly rampant when different legal or regulatory regimes overlap… for example, at the intersection of private and public law, as well as in transnational transactions.”

“When legal systems give private actors the power to choose the legal regime to be applied to their private transactions, legal arbitrage can be taken to another level altogether,” she writes. “It benefits actors with sufficient resources to hire attorneys to help them navigate a maze of domesticate and international laws in order to configure a world of law that works best for them.”

Legal arbitrage isn’t a “bug, it’s a feature of the legal system,” she told me in a phone interview. And while she respects the right of businesses to maneuver through or around obsolete laws, she believes that the spirit of the law is too often ignored.

“We will always need property and contract law to ensure the autonomy of private actors to work without state approval and central planning,” she said in an interview. “[But] we’ve stripped the law of its normative foundation. It’s just the scaffolding, the ‘black letter law,’ that’s left.”

In the area of pensions, she laments that the “courts have insulated officers from duty-of-care. We have allowed duty of care to go down the drain.” In the absence of a general obligation to “treat people fairly,” she told me, the law often leaves individuals no other recourse than arbitration or a class-action lawsuits.

Pistor’s words seem applicable to the suit filed last fall by NASCAR driver Kyle Busch and his wife, Samantha, against their insurance agent and Pacific Life, the issuer of their $10 million indexed universal life (IUL) insurance policy.

Through Pistor’s lens, it’s easy to see the web of intersecting and over-lapping legal and regulatory regimes that Kyle and Samantha Busch and their lawyers have to navigate and which, they now know, serve to protect the carriers and the agent. [See this RIJ’s story on the Busch case in this issue.]

When Senator Tom Harkin added his fateful amendment to the sprawling Dodd Frank law back in 2010, he may have thought he was preserving the indexed annuity business as it was, not opening the door to the Bermuda Triangle.

The amendment doesn’t even include the words “fixed indexed annuity” or “equity indexed annuity.”

But it kept FIAs in the realm of the insurance, and incentivized asset managers to buy into life insurers, gather fixed annuity liabilities, match them with illiquid private assets, and reinsure their investment risks offshore.

Had FIAs been coded as a security, federal regulators would likely have found them too complex and opaque to be suitable for retail investors. The Bermuda Triangle may never have been born.

And there’s a sequel. In 2018, the code of FIAs would be edited again, when two out of three judges at the famously pro-business Fifth Circuit Court of Appeals reversed a 2016 Department of Labor rule that contested their sale to IRA owners.

Had the Obama DOL’s “best interest” rule not been rescinded by the Fifth Circuit, or had the Trump DOL not declined to challenge the Fifth Circuit’s decision, the current drive to embed FIAs in 401(k) plans might have no legal footing at all.

When Private Equity Owns Both Sides of Your Transaction

Posted on February 3, 2026 by Peter Dziedzic -

There’s a conflict emerging in life insurance that most advisors are still treating like a product issue. It isn’t. It’s an ownership issue.

We’re not just watching private equity invest in carriers. We’re watching capital buy carriers, distribution, advisor platforms, and the technology layer, all at the same time.

That’s not “consolidation.” That’s vertical integration of the advice ecosystem.

And when the same capital sits on both sides of the table, manufacturing and distribution, the incentives don’t need to be sinister to be consequential. They just need to be consistent.

The shift most people are missing

The life insurance industry has always had conflicts. Commissions exist. Proprietary shelves exist. Carrier relationships exist. What’s different now is that these conflicts can become structural. They are embedded into the system rather than episodic or individual.

If a PE-backed platform:

Recruits and supports advisors,
Provides the tech stack, illustration tools, and workflow,
Sets grids and “best practices,”
And has ownership exposure to carriers and distributors…

…Then “independence” becomes something you have to actively engineer, not something you can assume.

This isn’t “bad advisors.” This is The Wire: the system is the main character.

What it looks like in the real world

Here’s a totally normal scenario.

An advisor joins a fast-growing platform. The platform delivers real value. Think compliance support, service staff, marketing, better tech, smoother operations. Clients benefit from that professionalism. Advisors get to spend more time advising. Then the advisor runs an illustration.

The tool defaults to a shortlist of carriers that happen to be “well integrated.” Those carriers also happen to have the strongest economic arrangements with the platform. The platform’s coaching team has a preferred process for product selection, because standardization creates efficiency. The grid is slightly better on certain solutions because scale earns concessions.

No one says, “Push Carrier X.” No one needs to.

The advisors still believe they’re being fully objective. The clients still believe they’re seeing a full market scan. But the rails have been laid… and the train usually stays on the rails.

It’s not a conspiracy. It’s incentive design.

None of these components is automatically unethical. A curated carrier set can be operationally sensible. Preferred pricing can be legitimate scale economics. Coaching can improve consistency and client outcomes. A well-designed UI can reduce errors and speed up service.

But collect enough “sensible” choices in one direction and you end up with something else entirely. Rather than “independent advice” you have a system where the advice pathway is quietly optimized for the ownership structure.

If you think incentives don’t matter, you’re basically the only person who watched Succession and concluded the moral was “communication.”

Follow the money, not the marketing

The pitch works because it’s actually compelling.

I know this firsthand. Before I moved into this industry, I spent years as a lawyer at two top international law firms representing private equity sponsors in acquisitions. These were sophisticated, institutional investors building platform strategies, not dabbling. I’ve sat in the rooms where integration, margin capture, and value-chain control were discussed as features, not bugs.

So when I say the PE playbook makes sense, I mean it.

In the RIA aggregator space, private equity hasn’t just invested capital. It has built operating systems. Firms acquire advisory practices, centralize operations, professionalize compliance, and create scale that individual advisors simply can’t replicate on their own.

At the same time, many of the same PE firms, or firms with overlapping investor bases, have taken stakes in life insurance carriers, reinsurers, and insurance distribution platforms.

The advisor pitch is clean. It’s a shiny gloss of better support, better technology, and better economics.

The investor pitch is even cleaner. Think controlling manufacturing and distribution, capturing margin at multiple points in the value chain, and creating sticky, recurring revenue through embedded financial products.

None of that is controversial. It’s disciplined capital strategy.

What tends to get lost is the client sitting across the table, a client with no visibility into the capital structure behind the recommendation, and often no way to understand how ownership incentives may influence the tools, processes, and defaults shaping the advice they receive.

What this means for advisors

If you’re evaluating a platform, an aggregator, an IMO partnership, or even a “free” tech stack, ask due diligence questions that go beyond the sales deck.

Who owns it two or three layers up? What business relationships are embedded in the tools? How do economics vary across carriers, and why? What data is being collected about your recommendations, and who benefits from that data?

Think of it like underwriting. You don’t just look at the face amount. You look at the structure.

What this means for clients

If you’re a client working with a platform-affiliated advisor, the question isn’t, “Is my advisor honest?” The question is, “What incentives sit upstream of my advisor?”

Am I seeing a true market scan or a curated shelf? Who benefits financially from the product manufacturer, directly or indirectly? What constraints exist in the tools used to compare options?

In complex structures, the answer might be, “your advisor’s advisor’s owner’s portfolio company.” That doesn’t make it wrong. But it makes it worth understanding.

The real gap: what disclosure was designed to catch

Most conflict frameworks focus on transaction-level incentives such as commissions, revenue sharing, fee arrangements. They weren’t built for a world where ownership can connect the advisor platform, the workflow tools, the distribution economics, and the manufacturers.

Oversight is fragmented. Rules often assume a level of independence that increasingly has to be proven, not presumed.

Current disclosure requirements assume independence exists unless proven otherwise. In this environment, it’s the reverse. Independence has to be proven, not presumed. The regulatory framework hasn’t caught up to that reality.

So what actually gets solved?

Yes, PE can bring improvements in terms of better operations, better service, better tech, more consistent processes.

But “better” depends on the objective.

Efficiency for whom? Technology optimized for what outcome? Scale that benefits who?

The best advice starts with the client’s actual problem: estate taxes, succession, liquidity needs, wealth transfer, income replacement. Then it matches the right solution using a process the advisor can explain and defend.

When the solution pathway also optimizes value capture for upstream owners, the advisor has to be able to answer the uncomfortable question, “Is this recommendation optimized for the client’s outcome or for the system’s economics?”

Those goals can overlap. They’re just not automatically aligned.

Where this goes next

This consolidation isn’t slowing down. More platforms will roll up. More carriers will take institutional capital. More “seamless” ecosystems will be built.

Advisors who recognize the shift early have a real opportunity. Be the alternative. Be the advisor who can demonstrate independence with receipts, not slogans.

Show the options you eliminated and why. Explain what your tools can’t compare. Disclose affiliations plainly. Document how the recommendation solves the client’s stated problem.

Independence isn’t a credential anymore. It’s a claim that requires evidence. If you can’t document how your recommendation process stays independent of your platform’s ownership structure, you’re probably not as independent as you think you are.

Data Connection

Posted on February 3, 2026 by No Author -

DOL Aims to End ‘Regulation by Litigation’

Posted on January 15, 2026 by Kerry Pechter -

(continued from Incoming!)

Few avenues of recourse for participants

Plaintiffs’ attorneys are the short-sellers of the legal system—taking significant risk for significant reward. In federal class action suits, as in personal injury cases, they typically work for “contingency fees” (contingent on a large financial settlement or judgment in their clients’ favor). Victory can reap them tens of millions in fees by suing ERISA plan sponsors.

The plan participants in the suits may only stand to receive hundreds or thousands of dollars each, and the cases can take several years to play out. Such suits, especially when initiated by the attorneys themselves, are often perceived by their targets as tantamount to legal gold-digging.

But plaintiffs’ attorneys, like short-sellers, serve a purpose. Their class action suits arguably shed light on the impact of costs on retirement accumulations, and may help lower those costs at plans nationwide, saving billions for plan participants generally.

Since a one-percent average investment fee may equal a third to a fifth of the average annual gain on a conservatively-invested 401(k) account, even modest fees can significantly erode 401(k) accumulations over time. High fees and between-job withdrawals (“leakage”) over decades of employment can result in inadequate savings at retirement for millions of Americans.

Ironically, the sponsors of small 401(k) plans are most likely to offer the worst terms to participants—high fees, no matching contributions, etc., long vesting periods—but it’s the deeper-pocketed corporate targets that attract the interest of the plaintiffs’ bar.

The suits serve a more general purpose. In the U.S., rank-and-file retirement plan participants may have no other way to recourse when trying to hold plan sponsors accountable for actions perceived as harming participants. If there’s weak regulation, litigation may be the only alternative.

In the Netherlands, by contrast, representatives of labor and management make retirement plan decisions together, with input from government. That’s not true in the U.S., where the decision to sponsor and maintain a 401(k) plan rests entirely with the company’s managers or owners. Retirement plans are mandatory for most companies in the Netherlands, but optional here.

Taken at face value, the DOL’s statements suggest that suing plan sponsors could backfire by discouraging them from sponsoring plans at all. Statements also indicate that the Trump DOL, as a regulator, doesn’t want help or interference from the plaintiffs’ bar. But if the plaintiffs’ bar represents the plan participants, then the DOL is, in effect, aligning itself against the participants—whom it is supposed to protect.

Labor Department leans against labor

The DOL surprised some members of the plaintiffs’ bar by filing an “amicus curiae” brief at the Supreme Court in support of Home Depot. That was counterintuitive, since ERISA was created in 1974 (sparked in part by the 1963 failure of Studebaker’s defined benefit plan) to protect the interests of plan participants, and mandated the plan sponsors to act “exclusively in the interests of plan participants.”

As DOL website puts it:

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to minimize the risk of large losses…

Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.

But, with its amicus brief, the Trump DOL added its weight to the corporate pan of the balance of justice by asserting that plan participants bear the burden of proving allegations of financial damage. It chose to focus on the law rather than on the substance of the complaint, and raised the legal hurdle for bringing excessive fee cases.

“The department made the facts clear: ERISA does not impose a special burden-shifting framework requiring defendants to disprove loss causation. Consistent with Supreme Court precedent, plaintiffs bear the burden of proving the essential elements of their claims, including loss causation,” said Solicitor Jonathan Berry, a DOL attorney, who filed the amicus brief.

ERISA Advisory Council

Posted on January 15, 2026 by Kerry Pechter -

“The duties of the council are to advise the Secretary and submit recommendations regarding the Secretary’s functions under ERISA.” At past meetings, Council members have heard testimony from members of the retirement industry and the public on topics of growing importance.

In 2023 and 2024, for instance, the Council solicited testimony on the question of whether the 1995 guidance for Qualified Default Investment Alternatives for 401(k) plans should be updated —at a time when plan sponsors needed guidance regarding the insertion of annuities and other income-generating tools into the QDIAs, into which participants’ contributions can be auto-invested.

In July 2024, the EAC heard testimony on that topic from such prominent retirement experts as Olivia Mitchell, executive director of the Pension Research Council at the Wharton School, Michael Finke of the American College of Financial Services, Gregory Fox at Aon, Bonnie Treichel, an ERISA attorney, and Kevin Hanney of RTX (formerly United Technologies Corp.), an architect of that company’s annuity-linked 401(k) plan.

“It’s disappointing, because the DOL will be flying blind on issues that might be percolating under the surface today but that could become important in the future,” Hanney told RIJ. “Before I was on the council, I relied heavily on its previous work. I downloaded all of the papers I could find and used them when we were designing our 401(k) lifetime income strategy. They were filled with insightful observations and pragmatic recommendations. The EAC was not in any way extraneous. I relied on its work to fulfill my fiduciary duties. If anything, it should have had a wider voice among retirement practitioners.”

According to Section 512 of ERISA:

The council consists of 15 members appointed by the Secretary of Labor. Three members are representatives of employee organizations (at least one of whom represents an organization whose members are participants in a multiemployer plan). Three members are representatives of employers (at least one of whom represents employers maintaining or contributing to multiemployer plans). Three members are representatives of the general public. There is one representative each from the fields of insurance, corporate trust, actuarial counseling, investment counseling, investment management, and accounting. Members must be qualified to appraise the programs instituted under ERISA. Members are appointed for three-year terms with five terms expiring on December 31 of each year. The council holds at least four meetings each year, which are open to the public. The council is subject to the Federal Advisory Committee Act.

None of the members of the Council reached by RIJ had received any official notice or explanation from the Department of Labor regarding the reasons for the suspension or cancellation of meetings.

Democratic members of the House Committee on Education and Workforce received no formal response from Labor Secretary Lori Chavez-DeRemer to their letter asking why the DOL “reportedly placed the Council ‘on ice,’” according to their staff.

ERISA attorney Marcia Wagner told RIJ in an email that cancelling EAC meetings is not legal but reflects Trump administration policy:

“Since the ERISA Advisory Council was established under ERISA, the Trump Administration technically cannot disband it. There was a tentatively scheduled third-quarter meeting, but it did not occur because of the government shutdown.)

Also, I believe that the absence of ERISA Advisory Council meetings in 2025 was simply an illustration of the Trump Administration hostility to the administrative state, and the Council was simply viewed as unnecessary, in the same manner that the Department of Education or other parts of the federal bureaucracy were viewed as unnecessary.”

“I honestly don’t know,” said Mark Debofsky, a Chicago lawyer who was in his final year as an EAC council member, when RIJ asked him why the EAC didn’t meet last year. “I think ‘DOGE’ shut down every advisory council for 2025.

“It wasn’t just the ERISA Advisory Council,” Debofsky said. “During the two years that I was on the Council, I thought we did meaningful work. There was a definite purpose to it. It’s a collegial body that was able to do deep dives into important topics. It’s disappointing. I think we did important work.”

“We were never called, we never met. No reason [was] given,” another individual, asking not to be identified, told RIJ.

According to the EAC’s website:

For the purposes of ERISA section 512, the candidate’s political party affiliation must be noted, as section 512 requires that no more than eight council members may be of the same political party. The recommendation also must state whether the candidate is available and would accept appointment to the council. Candidates should be willing to commit 15-20 days per year to accomplish the work of the Council and should be qualified to appraise the programs implemented under ERISA. Members of the Advisory Council are paid for days traveling for and attending Council meetings and are reimbursed for travel expenses to attend meetings.

“The ROI on the EAC is quite large,” said Hanney in an email. “Council members are technically Special Government Employees. We worked about 20 days each year, not including the time we spent drafting our reports. Under the council charter, members can be paid a small stipend but not everyone accepts. It was based on pay tables published by the Office of Personnel Management and ran about $5,000 per year if I remember correctly.

“Travel expenses for Council members were minimal and adhered strictly to government procurement rules, such as only flying coach on approved airlines between approved airports, or taking Amtrak. The hotels were rotated to comply with the procurement rules, too. We received a small per diem for meals and had lunch in the [Frances] Perkins Building [the DOL headquarters in Washingon, D.C.] cafeteria almost exclusively. My travel reimbursements were less than $3,000 per year.

“I recall the council had dinner as a group a couple times a year, but even then I think the locations were from approved lists. All of our meetings were in the Perkins Building except for a day-long conference call that I think is conducted over Zoom now. Witnesses cover their own expenses when they appear in person (I did too when I testified in 2024), and many now testify remotely over Zoom. There used to be some printing costs for written testimony, but I believe that they only provide digital copies now unless witnesses bring their own printed copies.

“The biggest costs were probably for the EBSA staff that supported the Council and the stenographer who recorded transcripts of the meetings. I would be surprised if the yearly budget was substantially more than $300,000.”

News from around the Bermuda Triangle

Posted on January 6, 2026 by Editorial Staff -

Corebridge Financial Inc. said it has closed on the final portions of a multibillion-dollar reinsurance agreement with Corporate Solutions Life Reinsurance Co., a unit of Venerable Holdings Inc., according to AM Best. Venerable is owned by an investor group led by affiliates of Apollo Global Management, Inc., Crestview Partners, Reverence Capital Partners, and Athene Holding Ltd.,

The transaction is valued at $2.8 billion, consisting of both ceding commission and a capital release. It will generate about $2.1 billion in distributable proceeds for Corebridge after tax, the company said.

Corebridge Financial Inc. said last year it would reinsure all of the $51 billion in variable annuities of its individual retirement business with CS Life Re, a subsidiary of Venerable Holdings Inc. (BestWire, June 27, 2025).

Venerable also completed the acquisition of SunAmerica Asset Management LLC from Corebridge as part of the deal. Venerable said it will pick up 53 employees, as well as a new office in Houston and expanded presence in New York at One World Trade Center.

Venerable previously announced the commencement of new business variable annuity flow reinsurance and completion of the $48 billion reinsurance transaction with American General Life Insurance Co., an entity of Corebridge, in August 2025.

Corebridge said in August it had closed on the largest portion of a previously announced reinsurance transaction with CS Life Re. The closed portion was comprised of variable annuities issued by Corebridge subsidiary American General Life Insurance Co. and represents about 90% of the total deal, the company said at the time.

Venerable’s total assets under risk management following the close of all three transactions will increase to $118 billion from $67 billion to $118 billion on a pro forma basis as of March 31, 2025.

In line with Venerable Advisers growth strategy, the acquisition of SAAMCo will more than triple assets under management across affiliated advisers to approximately $52 billion, the company said.

Underwriting entities of Corebridge Financial Ltd. have current Best’s Financial Strength Ratings of A (Excellent). Shares of Corebridge Financial Inc. (NYSE: CRBG) traded at $31.43 on the morning of Jan. 5, up 3.49% from the previous close.

Ratings updates

Prudential Financial, Fidelity Investments and Kuvare recently had the credit ratings of their domestic insurance or Bermuda-based reinsurance units reviewed by AM Best or KBRA, two Nationally Recognized Statistical Ratings Organizations (NRSROs).

Prudential Financial

Two recently-formed Bermuda-domiciled reinsurers owned primarily by Prudential Financial and Warburg Pincus, Prismic Life Re and Prismic Life Re International, were assigned A- and a- (Excellent) strength and credit ratings from AM Best, with stable outlooks.

Prismic Life Re primarily places U.S.-based business while PL Re International primarily places non-U.S. based business, AM Best said. The rating agency noted:

Two of the Prismic companies’ largest shareholders, Prudential Financial, Inc. (Prudential) [NYSE: PRU] and Warburg Pincus, have strong interests in cross servicing the assets managed through the reinsurance treaties along with Prismic’s management of the contract liabilities.

At its inception in 2023, Prismic Life Re had secured a reinsurance contract consisting of U.S. structured settlement annuities. Following the formation of PL Re International, Prismic’s management secured its first transaction, consisting of USD 7 billion of Japan-based whole life insurance policies.

The future pipeline for business is projected to be active going forward. PL Re International recently closed on its first flow reinsurance deal in September 2025.

According to AM Best, “Through several funding rounds, both Prismic entities have secured more than adequate levels of capital and elevated risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and by Bermuda’s regulatory solvency capital requirement measurement.

“Each additional treaty is expected to come with specific reserve requirements and AM Best, through its credit rating practices, will monitor this adequacy. Prismic’s management has also furnished the necessary business plans needed for rating newly-formed companies, which are used as the basis of the newly assigned ratings.

“The financial flexibility and the company’s ability to acquire new business from Prudential and Warburg Pincus, AM Best said, noting that the business acquired comes with assumed product risk by Prismic Life Re and PL Re International management team.”

Fidelity

KBRA (Kroll Bond Rating Agency) assigned an insurance financial strength rating (IFSR) of A and a stable outlook for Soteria Reinsurance Ltd, a Bermuda long-term reinsurer established in 2022. It is owned by Soteria Reinsurance Holdings LLC, a unit of Fidelity Investments.

Soteria assumes annuities offered by Fidelity Investment Life Insurance Company and sold by financial advisors operating through the Fidelity Insurance Agency.

Soteria’s reinsurance “of predictable single premium deferred annuity (SPDA) flow from Fidelity Investment Life Insurance Company (FILI), provides a stable new business pipeline of affiliated reinsurance with strong visibility into product design, expected cash flows, and underlying policyholder behavior,” KBRA said.

Soteria reported year-end 2024 GAAP equity of $84.8 million and a Bermuda Solvency Capital Requirement (BSCR) coverage ratio of 319%, well above regulatory requirements and internal targets. The company remains fully equity-funded and operates without financial leverage.

Fidelity Investments serves over 45 million investors and manages some $15.1 trillion in assets as of year-end 2024. The company offers mutual funds, employee benefits, online brokerage, real estate investments, and an array of annuity products through its insurance operations.

Kuvare

AM Best affirmed the Excellent (A- and a-) strength and credit ratings of Guaranty Income Life (Louisiana) and United Life (Iowa), which are part of Kuvare Retail Group, and Kuvare Life Re Ltd. (Bermuda).

Kuvare was the 15^th largest seller of fixed indexed annuities in the U.S. in the first three-quarters of 2025, with about $1.8 billion in sales.

AM Best also affirmed the financial strength rating of B++ (Good) and long-term issuer credit ratings of “bbb” (Good) of Lincoln Benefit Life (Illinois). The outlook of these ratings was revised to stable from negative.

“The ratings of Kuvare Retail Group recognize its solid operating improvements over the last several years, including premium growth in its key annuity products and stable operating profile with strong operating returns,” an AM Best release said

“AM Best also notes the recent key initiatives that have improved capitalization and leverage. Going forward, AM Best expects the organization to have a measured approach to growth within future risk-based capital limits.”

It’s Time to Raise the State Guaranty Fund Limits

Posted on January 6, 2026 by Paul McGillivray -

The State Guaranty Annuity Coverage chart in the December issue of Retirement Income Journal highlights a secondary layer of consumer protection for fixed interest and fixed indexed annuities.

Given how much has changed with the use of annuities of all types for individual retirement planning, I believe it is time for state guaranty coverage limits be raised from the common amount of $250,000 to at least $1 million. Historically, state annuity regulation seems to address some recent financial catastrophe.

The risk-based capital system followed the junk bond explosion that killed Executive Life and others. The state guaranty association limit was raised from $100,000 to $250,000 after the Great Financial Crisis. That was only a near disaster for the fixed and indexed annuity world but the FDIC protection for banks was raised to $250,000 and so our industry followed.

We should anticipate that one of these years some annuity carrier will have its own financial crisis and guaranty association coverage will be needed. Learning from the past, we should increase the protection for our client annuity buyers before that happens. Annuity industry purchases have doubled in the past five years, as you have well reported. Average size purchases and average household annuity balances must have followed in that direction.

Unlike commercial banks, insurance carriers pay guaranty association assessments after carrier losses and deficits have been determined. While, there have been a couple of small carrier failures who wrote some annuities that resulted in loss assessments, total assessments have been microscopic, relative to total annuity sales. This is a credit to our regulatory system and our insurance carriers. Such losses are only a de minimis cost to the annuity industry.

The new regulation needed by individual states to increase their guaranty association coverage limits could also address the question of what is covered when lifetime income riders and enhanced death benefits are a benefit of the in-force annuity.

Some of us assume some kind of present value calculation will be done to incorporate those benefits. Clarifying this “rider question” might forestall much unnecessary litigation. A calculation like that used by carriers annually to determine the qualified annuity fair market value for RMD purposes could work well enough.

It is easy to imagine a fixed indexed annuity with a GLWB income rider being in payout mode for years and the annuity cash value quite small. Clearly the valuation of that annuity is the income rider value and not the cash value. This needs to be defined and coverage clarified.

Lastly, RIJ is a leader in the call for examination of the what you have called the “Bermuda Triangle.” As RIJ has described it, this is the annuity industry’s use of investment banking ownership and/or affiliation with captive and/or offshore reinsurance to increase the competitiveness and annuity sales of carrier products. I don’t know if this form of organization requires urgent warning and action or if it is something else that is new and important and requires more disclosure, compliance, and experience. I cannot see the future any better than the next person.

I expect new state regulation to move slowly toward a closer view of and stricter compliance by “Bermuda Triangle” annuity carriers. State guaranty association increases would provide greater protection from the consumer side of the regulatory coin. This should be done just in case some annuity carrier implodes in a big way before the industry side of the regulatory coin has moved any further.

The author is Director of Sales Support at M&O Marketing in Southfield, Michigan.

RIJ and ChatGPT Discuss ‘Business Development Companies’

Posted on January 6, 2026 by Editorial Staff -

RIJ: What are BDCs, and why do I keep hearing about them when reading about private credit?

ChatGPT: BDC equals Business Development Company. A BDC is a type of publicly-traded investment company that Congress created in 1980. They’re designed to funnel capital to small and mid-sized U.S. businesses that are too big for banks and too small for public bond markets. Think of a BDC as a publicly-listed wrapper around a private-credit portfolio.

Most BDCs primarily make:

Senior secured loans
Unitranche loans (A hybrid loan structure that combines senior debt and subordinated debt in one loan, allowing banks to compete better against private debt funds)
Occasionally mezzanine debt or equity kickers

BDCs show up in private credit discussions because they’re how retail and semi-retail investors access private credit. Private credit itself is:

Illiquid
Opaque
Institutionally dominated

BDCs by contrast are:

Publicly traded
Yield-focused
Regulated under the Investment Company Act

When you read about private credit “going mainstream,” BDCs are usually the bridge.

How BDCs are structured (key mechanics)

BDCs must:

Invest ≥70% of assets in U.S. private companies
Distribute ≥90% of taxable income (like REITs)
Use limited leverage (generally ~2:1 debt-to-equity max)
Mark portfolios to fair value quarterly

That structure explains their:

High yields
Fragility in downturns

BDCs offer:

High stated yields (often 8–12%+)
Quarterly or monthly income
A “private markets” story in a liquid format

But their:

NAVs can be volatile
Dividends can be cut
Secondary market prices can diverge sharply from portfolio value

How BDCs differ from “pure” private credit funds

Feature	BDC	Institutional Private Credit Fund
Liquidity	Daily (public stock)	Locked up (5-10 yrs)
Investor base	Retail & advisers	Pensions, insurers
Valuation	Quarterly marks	Often internal marks
Leverage	Capped	More flexible
Fees	Visible	Often opaque
Behavior in stress	Price drops fast	Value adjusts slowly

Why we’re hearing about BDCs now

1) Banks pulled back. Regulation + capital rules → banks lend less to mid-market firms → private credit fills the gap.
2) Rates went up. Floating-rate loans inside BDCs suddenly pay real income, which makes them headline-worthy.
3) Everyone wants alternative investments. BDC says “private credit” without a 10-year lockup.

So, a BDC is a publicly traded income vehicle that lets investors own a slice of private credit — with all the transparency, volatility, and marketing that implies.

Why you hear the term ‘BDC’ so often in private credit

For non-institutional money, a BDC is often the only legal way to access private credit at scale. BDCs have become:

The retail face of private credit
Heavily marketed
Heavily discussed

RIJ: Can a CLO and a BDC be the same thing?

ChatGPT: No. CLOs and BDCs sit next to each other in private credit, but they are not the same thing. They can be connected, but they are structurally and legally distinct.

A CLO and a BDC cannot literally be the same legal entity.
The same manager can run both a CLO and a BDC.
A BDC can own pieces of CLOs (usually the equity tranche).

That overlap causes confusion.

RIJ: How do BDCs compare to closed-end funds?

ChatGPT: A BDC is best thought of as a specialized, regulated subtype of closed-end fund — one that:

Is created by statute (not just by SEC registration),
Invests primarily in private, illiquid credit, and
Has additional rules layered on top of the normal CEF framework.

BDCs share these traits with closed-end funds:

Permanent capital (no daily redemptions)
Publicly traded shares
Market price can differ from NAV
Use of leverage
Income-oriented investor base

From an investor’s point of view, BDCs and CEFs feel similar:

You buy a stock
You get a yield
The price can swing independently of portfolio fundamentals

But a CEF typically holds public bonds, equities, and municipal bonds, while a BDC typically holds private loans, unitranche debt, and mezzanine credit. That makes BDCs less liquid at the asset level and more dependent on manager judgment for valuation.

RIJ: Thank you.

Retirement healthcare cost projections

Variance by state

Healthcare costs vs. Social Security benefits

Challenges for women

IRMAA surcharges

End-of-life care

Shake-up at top of the Department of Labor

Busches settle their lawsuit against Pacific Life

PRT market finished 2025 on a high note

ICI and DCALTA to collaborate on private assets in 401(k)s

Pacific Life Re in longevity swap with Dutch unit of Aegon

Symetra enhances FIA features

Compare and contrast

Guaranteed or not

Slow-walking lifetime income

Kuvare distances itself from Blue Owl

Cayman covets Bermuda’s reinsurance success

Rithm Capital buys CL Life and Crestline Management to enter Bermuda Triangle

Teachers’ unions ask SEC to probe Apollo over Epstein contacts

The assumption most investors make

UCC Article 8 and the concept of the “security entitlement”

The intermediation chain

Why legal structure matters during stress

The priority “waterfall” explained

This is not alarmism

Why this matters for advisors

Diversifying legal structures, not just investments

What advisors should communicate to clients

A more complete definition of fiduciary care

Conclusion

Sale of PHL Variable blocks ‘no longer feasible’

Delaware Life FIA now offers Bitcoin exposure

Corebridge FIA offers ‘modest’ Bitcoin exposure

Ratings of insurers involved in 777 controversy are downgraded

Dimon’s ‘cockroach’ comment sparks minor run on private credit firms

Global watchdogs scrutinize private credit ratings

Egan-Jones Ratings no longer recognized by Bermuda regulator

Eldridge and Carlyle AlpInvest credit fund gets ~$1.5 billion

Sheryl Moore, Winkintel.com

Bobby Samuelson, lifeproductreview.com

David Macchia, Wealth2k.com and Definedbenefitlife.com

Larry Rybka, Valmark Financial Group

Peter Gould, retired pension professional

Antoine Orr, Plancorr Wealth Management

Barry Flagg, Veralytics.com

Tom Love, Colton Groome Financial

The shift most people are missing

What it looks like in the real world

It’s not a conspiracy. It’s incentive design.

Follow the money, not the marketing

What this means for advisors

What this means for clients

The real gap: what disclosure was designed to catch

So what actually gets solved?

Where this goes next

Few avenues of recourse for participants

Labor Department leans against labor

Ratings updates

Prudential Financial

Fidelity

Kuvare

How BDCs are structured (key mechanics)

How BDCs differ from “pure” private credit funds

Why we’re hearing about BDCs now

Why you hear the term ‘BDC’ so often in private credit

Data Connection

Create a free account, or log in.

Upgrade your subscription