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Corebridge-Equitable Merger: An Aftershock of 2008

Posted on April 1, 2026 by -

When Corebridge Financial and Equitable Holdings announced their merger last week, creating a life/annuity giant that sold a combined $50.6 billion in deferred fixed and variable annuities in 2025, the two companies’ recent balance-sheet maneuvers suddenly seemed less mysterious.

The future merger partners were apparently sprucing themselves up for the wedding. [See Corebridge presentation on the deal here.]

Both companies cleaned up their balance sheets by reinsuring either old variable annuity contracts with lifetime income guarantees or old life insurance business. Both took advantage of “Bermuda Triangle” reinsurance strategies—where liabilities leave the original’s balance sheet but assets remain under its management—in the process.

Reinsurance transactions are typically buried in an insurer’s state filings. Sometimes a reinsurance deal merely indicates the divestiture of business an insurance company no longer needs or wants. But over the past decade, once-frowned-upon “financial reinsurance” for “surplus relief” has become a key tool for reducing an annuity issuer’s capital requirements.

A reduction in capital requirements can boost a life insurer’s capacity for new annuity sales, raise its profitability, and “release” capital for new ventures or share buybacks. Life insurers led by asset managers like Apollo and KKR perfected this strategy in the 2010s. Older, publicly-traded insurers have gradually followed.

The Corebridge-Equitable merger reflects the ongoing restructuring and recovery of the older U.S. life/annuity companies since the crushing effects of the 2008 financial crisis and the low interest-rate period that followed. Those effects included disruption by the opportunistic asset managers, who provided damaged life insurers with capital and alternative-investment expertise.

In 2008, Corebridge was still AIG’s retirement business and Equitable had not yet separated from French insurance giant AXA. (Back then, ING-US hadn’t become Voya and MetLife hadn’t yet spun off Brighthouse.) So the new merger, which creates a firm with a market value of $22 billion, might best be seen as another aftershock of the Great Financial Crisis.

The merged company will carry the Equitable brand and be domiciled in Houston. Corebridge shareholders will own approximately 51% of the combined company and Equitable shareholders will own approximately 49% of the combined company.

Recent reinsurance deals

Last August, Corebridge’s main life insurer, American General, moved a millstone off its balance sheet by reinsuring $45 billion in old variable annuity liabilities with Corporate Solutions, a firm co-founded by Apollo Global Management. The VA contracts were encumbered with the tail risk of guaranteed lifetime income riders.

That enabled Texas-domiciled American General to report a negative $29.9 billion in new liabilities on its statutory filing for calendar year 2025. That was in addition to the $281 billion worth of funds-withheld reinsurance for life insurance liabilities that American General ceded to its parent’s reinsurer in Bermuda.

In 2024, Equitable relocated its flagship insurer from New York to more liberally-regulated Arizona, flirting with a technical insolvency at year-end 2024. That year, Equitable set up a reinsurer in Bermuda to facilitate future liability management. See RIJ’s September 2025 article on Equitable’s relocation.

Last August, Equitable Financial Life, Equitable’s newly-established Arizona insurer, reported $35 billion in “OL” reinsurance with RGA Re Insurance Company of Missouri. This deal was also done on a coinsurance basis, which means that Equitable and its affiliated asset manager, AllianceBernstein, could hold the assets backing the liabilities in trust for RGA Re and continue to manage them.

Source: Corebridge’s March 26, 2026 presentation.

Details of the merger

The not-yet-approved Corebridge-Equitable all-stock merger would create a “retirement, life, wealth and asset management company with formidable distribution capabilities, enhanced scale and a diversified portfolio of businesses with well-established global brands,” the companies said in a release last week.

The combined company will serve about 12 million customers and have about $1.5 trillion in assets under management and administration across individual retirement, group retirement, asset management, wealth management, life insurance and institutional markets.

“Over time, the combined company expects to shift over $100 billion of Corebridge’s general and separate account assets to AllianceBernstein,” the release said.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Corebridge and Equitable will form a new parent company and each outstanding share of Corebridge common stock will be exchanged for the right to receive 1.0000 shares of the new parent company’s common stock, and each outstanding share of Equitable common stock will be exchanged for the right to receive 1.55516 shares of the new parent company’s common stock.

© 2026 RIJ Publishing LLC. All rights reserved.

What’s Behind Annuities’ Latest Sales Record?

Posted on April 1, 2026 by -

U.S. life/annuity companies sold nearly half a trillion dollars’ worth of annuities in 2025, a record. But the available sales data doesn’t tell us why Americans bought the annuities, or help us distinguish net flows from gross sales, or explain why we still call vastly different products, “annuities.”

That’s not the “annuity puzzle,” as evoked by Menahem Yaari’s famous 1965 paper on the wisdom of annuitizing one’s savings. But it’s puzzling.

LIMRA, the life/annuity industry’s Connecticut-based market research arm, reported U.S. annuity sales of $464.1 billion in 2025, up 7% from 2024. Fourth quarter Q2025 sales were $117.2 billion, up 14% from 4Q2024. LIMRA’s sales survey covers 93% of the market.

Des Moines-based WinkIntel, whose survey includes slightly different data, reported $448.9 billion in overall sales in 2025, up almost 5% from 2024, and $116.9 billion in 4Q2025, up almost 17% from 4Q2024.

Both LIMRA and WinkIntel gather sales information from life insurance and annuity issuers, tabulate the data, and sell subscriptions to the information back to the companies. LIMRA says its individual annuity sales survey covers 93% of the market. It identifies the top 20 annuity sellers in each of the main annuity categories: Fixed-rate, multi-year guaranteed rate, fixed indexed, “payout” annuities (including single-premium immediate, or SPIAs, and deferred income, or DIAs), traditional variable, and registered index-linked variable (RILAs).

At WinkIntel, CEO Sheryl Moore has chosen another taxonomy. It labels annuities as either “Deferred” or “Income.” Deferred annuities include variable (traditional and RILAs) and fixed (indexed, fixed-rate and MYGA. Income annuities include SPIAs and DIAs.

Moore lists the top 10 sellers in each product category, along with the top five sellers in each of the various distribution channels: Banks, full-service national broker-dealers, independent broker-dealers, registered investment advisers, independent insurance agents, career insurance agents, and direct response.

Data on gross sales of annuities can be misleading. Owners of investment-like deferred annuities (unlike illiquid, irrevocable income annuities) can exchange them for or replace them—subject to surrender penalties or contract breakage fees known as market-value adjustments—with new and typically more attractive ones.

Replacements are counted as new sales. Payouts of interest, benefits or distributions aren’t subtracted from the gross revenue. So gross sales far exceed actual industry growth. According to Conning Insurance Research’s 2025 Life-Annuity Market Overview, “aggregate net flows improved in 2024, ending at $81 billion compared to $59 billion in 2023. The strong direct premiums in 2023 caused positive net flows. This was the third consecutive year of positive net flows for the individual annuity line.”

It’s also hard to tell whether people are using annuities merely as safe fixed-income investments, or a way to trade mutual fund-like investments without generating current-year taxable gains, or for the purpose that their name implies: as sources of annual income in retirement.

LIMRA and WinkIntel suggest that owners of deferred annuities, which primarily offer safe growth, are switching on the income riders (guaranteed lifetime withdrawal benefits, or GLWBs) to get income-for-life while still being able to dip into principal for emergencies.

LIMRA research chief Bryan Hodgens suggested as much when he attributed rising annuity sales to the societal loss of income from guaranteed pensions. In a release, he said annuity demand is augmented by the “4.1 million Americans [who] are turning 65 each year ― many who don’t have pensions or other income sources to meet their basic living expenses in retirement.”

“The most recent data illustrates that 53.2% of indexed [annuity buyers] are electing a GLWB,” WinkIntel’s Moore told RIJ in an email. And contract owners aren’t merely buying that rider, paying an annual fee, and forgetting to use it to turn the annuity’s cash value into a guaranteed stream of income.

“The insurance companies are reporting that 28.7% (on average) of GLWBs are currently distributing income to the client,” she said. But “individual company results range from 1.3% to 52.3%,” Moore said. She didn’t identify those companies.

Many publicly-traded life/annuity companies were burned by their over-issuance of under-priced GLWBs on variable annuities in the 2000s and 2010s. Some of those issuers went out of business, were divested from foreign owners, were restructured, or switched to products with less tail risk. More than a decade later, some life/annuity companies are still selling or reinsuring their blocks of VAs with GLWBs to get them off their balance sheets.

Anecdotally, we hear little about the use of deferred annuities as part of a deliberate lifetime income planning. We asked Jamie Hopkins, financial advisor and co-author with Bonnie Treichel of “Your Retirement Sketchbook,” if he does. “Short answer: I am not,” Hopkins said.  “What I am mostly seeing lately or being asked about from clients is RILAs and the fixed indexed annuities—but we have not seen as much use of GLWB riders with them.”

Single-premium immediate income annuities and deferred income annuities, which strictly produce retirement income from an irrevocable lump-sum investment, are still the annuities that Americans are least likely to buy.

“Total income annuity sales were a non-starter this quarter,” wrote Moore in WinkIntel’s analysis of last year’s sales. “SPIA and DIA sales aggregately dropped more than 6% [in 2025], while only experiencing a 1% increase over 4Q24.”

Yet, for the handful of mainly mutual companies (i.e., owned by their customers) that sell payout annuities, led by New York Life ($7.1 billion in 2025), last year ended on a high note. “Ten percent of [life insurers] had triple-digit gains” in 4Q2025 from 3Q2025, Moore said.

In the fourth quarter of 2025, SPIA sales increased 23% from the prior quarter to $3.9 billion, LIMRA reported, while DIA sales rose 22% to $1.4 billion. For the year, SPIA sales ticked up 6% to $14.4 billion and DIA sales fell 3% to $4.8 billion.

Nearly 30% of [life insurers surveyed] experienced double-digit sales increases” in DIA sales in 4Q2025, LIMRA agreed. But DIA sales were down by more than 9% when compared to the fourth quarter of 2024, and down more than 20% in 2025 from 2024. “It is expected that DIA sales will be down again in 2026,” a LIMRA release said.

The top-selling annuities in 2025, as in most years, are the deferred annuities that investors use for loss-resistant, tax-deferred accumulation—i.e., growth rates that beat other fixed income alternatives. These included multi-year guaranteed-rate annuities aka MYGAs ($162.55 billion), fixed indexed annuities ($126.7 billion), registered index-linked annuities aka RILAs ($75.94 billion) and traditional variable annuities ($67.67 billion).

What about the annuity puzzle, which asks why more people don’t annuitize their savings in accordance with the principles of Yaari’s paper?

In a country like the U.S., whose universal Social Security system protects almost everyone from longevity risk, and where most retirees need more liquidity to complement their state-provided guaranteed income, the low take-up of illiquid private annuities shouldn’t puzzle us.

The U.S. life/annuity industry posted a 34% year-over-year increase in net income to nearly $40 billion in 2025, the largest total in the last five years, according to a new Best’s Special Report, “First Look: 2025 Life/Annuity Financial Results.” The data is derived from companies’ annual statutory statements received as of March 19, representing an estimated 93% of the total life/annuity industry’s premiums and annuity considerations.

According to the report, total income for the U.S. life/annuity industry increased by 13% in 2025 over the prior year, driven by a $101.2 billion increase in other income, largely due to a combined $84.8 billion increase of reserve adjustments on reinsurance ceded at American General Life Ins. Co. and Athene Annuity and Life Co., along with an 8% increase in net investment income.

Total expenses for the industry increased by 13% as general insurance and other expenses rose 66%. The resulting pretax net operating gain of $51.8 billion was a 22% increase from 2024. A 15.7% reduction in taxes was offset by an increase in realized capital losses, resulting in the net income increase.

Capital and surplus increased by nearly $24 billion, or 4%, from the end of 2024 to $530.7 billion, as a combined $64.7 billion from net income plus increases in unrealized gains and contributed capital and other changes in surplus were reduced by $40.8 billion, owing to changes in the asset valuation reserve and stockholder dividends.

© 2026 RIJ Publishing LLC. All rights reserved.

DOL Proposal Will Block Participant Lawsuits

Posted on April 1, 2026 by -

On March 30, the Department of Labor (DOL) released its proposed regulations to implement President Trump’s Executive Order (EO) allowing employers to include private equity, private credit funds, crypto, and all manner of risky alternative assets in defined contribution retirement plans — mainly 401(k) plans — without worrying about employees suing them over high fees or poor performance.

The President released EO 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” in August 2025. It instructs the Department of Labor and the Securities and Exchange Commission to develop “safe harbors” that will protect employers from being sued by employees who believe that their employer inappropriately allowed high fee or risky investments in their retirement accounts.

Access to workers’ nest eggs has long been a goal of the private equity industry. It has lobbied hard for this protection for employers as it wants to tap into the $9 billion in workers’ 401(k) accounts. ERISA, the Employee Retirement Income Security Act of 1974, has strict requirements for retirement account investments. Employers have a fiduciary responsibility for assuring that these investments are prudent, and can be sued by workers for including retirement assets that don’t meet this standard.

Workers have successfully sued their employers for breach of fiduciary duty for failing to do due diligence in the selection of investments, failing to monitor their performance, and paying high fees. The overarching goal of the proposed regulation, according to the DOL, is to alleviate litigation risk for employers, who would then be free to expose workers’ retirement accounts to alternative investments.

While ERISA does not identify categories of investment to be avoided and employers have always had the ability to include these assets in workers’ retirement accounts, only 4 percent of defined contribution plans offered alternative investments in 2024.

Litigation is not the only concern that employers have. Complexity, illiquidity, lack of transparency, and lack of worker complaints about current offerings are other reasons that employers have not pursued alternative investments.

The central theme of the proposed regulations is that:

  1. ERISA does not preclude employers from including alternative investments in direct contribution retirement accounts including, notably, 401(k) plans;
  2. ERISA requires that employers be prudent in selecting a menu of investment choices that workers can choose from;
  3. Prudence has to be exercised in considering six factors that go into a decision to include any investment in workers’ retirement accounts: performance, fees, liquidity, valuation, benchmarking, and the complexity of the investment;
  4. Prudent processes at the time the employer makes the decision to include the investment, and not results, is what matters for the liability of the employer. Safe harbors are provided in the proposed regulation, that is, processes for considering each of the six factors that, if followed, protect the employer from being sued by employees;
  5. As an example of a safe harbor, an employer cannot be considered imprudent for selecting an investment alternative with higher fees than another investment with lower fees and the same risk profile if, for instance, the value proposition for making the investment includes better customer service;
  6. A fiduciary that follows the processes described in the proposed regulation is “presumed to be reasonable and is entitled to significant deference” by the courts and should “be able to confidently rely on that determination without undue fear of litigation.”

But here’s the DOL’s bottom line: Seeking assistance from an investment advice fiduciary or an investment manager that is an ERISA fiduciary gets the employer off the hook altogether. The employer, according to the DOL, “is responsible for the prudent selection of the manager but is not liable for the individual investment decisions of that manager.”

© 2026 Center for Economic and Policy Research. Reprinted by permission of the author.

‘Why Social Security Can’t Go Broke’

Posted on March 31, 2026 by -

The chapter about Social Security that I was invited to write for the “Elgar Companion to Modern Money Theory” (2024) is now freely available on a stand-alone basis to the public, for a limited time. You can access the chapter here. It’s titled “Why Social Security Can’t Go Broke.”

After studying our pay-as-you-go Social Security system and comparing it with alternatives in other countries, I’m persuaded that what some call a weakness of our system—a lack of pre-funding—is actually a strength. Pre-funding is fine for investment-based retirement programs, like the 401(k)/403(b) systems, because it pursues individual investment risk.

But it’s inefficient for an insurance system like Social Security hat pursues society-wide risk reduction. Pre-funding is inefficient in the way that the old high-inventory maintenance practices were inefficient; just-in-time inventory management proved better. Stock-piling financial assets for 30 years may be appropriate for capitalizing corporations, but not for providing income benefits to retirees.

Other countries’ experience with “collective DC” (CDC) shows that pre-funding exposes savings to governance risk, market risk (unequal outcomes), and fee-erosion. CDC systems don’t eliminate the need for a tax-funded minimum pension for the poor, and as Australia’s experience shows, CDC without mandatory annuitization at retirement doesn’t protect retirees from longevity risk.

Only a mandatory insurance system like Social Security, which relies on payment of premiums in return for benefits in retirement, can do all that at low expense. It cuts overall costs by being life-contingent and pooling longevity risk. America’s biggest retirement problems are the 50% shortfall in 401(k) coverage and declining fertility. Blaming the pay-go structure for low fertility rates would not solve any retirement financing problems.

No life insurer, or consortium of life insurers can finance the nation’s longevity risk; the government alone can bear that risk, which inevitably includes fluctuations in premium and benefits. Our Social Security system’s benefit formulas may need tweaking, but only pay-go can pool longevity risk, minimize costs, and provide the life-contingent guarantees that retirees need.

The idea that today’s retirees are spending the payroll taxes of today’s workers, I’ve found, is not consistent with the way our monetary system works. The federal government creates money (liabilities) by spending and destroys it by taxing.

The greatest impediment to Social Security reform isn’t financial, it’s political. It will take a lot of bipartisan cooperation and compromise to improve our pay-go system. We don’t have that today. But we need to start talking about Social Securty today in order to avoid blunt, blind cuts in benefits after 2032-33. Here’s another link to my chapter.

© 2026 RIJ Publishing LLC. All rights reserved.

CITs: Private Credit’s Pathway into 401(k) Plans

Posted on March 31, 2026 by -

Asset managers who originate and bundle “private credit” and other alternative assets are eager to put more of their products on the investment menus of 401(k) plans, a $9 trillion pool of retirement savings.

Since many look to managers of collective investment trusts (CITs) to shepherd them through the process, CIT trustees are consequently having a moment.

Christopher Randall

“I’m drinking from a firehose,” Chris Randall, managing director for Retirement Services at SEI Trust Company, told RIJ. “Everybody—all the asset managers—are trying to pick CIT dance partners so that they can have product in the defined contribution market.”

Under U.S. pension law, the investments in 401(k) plans must be packaged in legal envelopes. SEC-regulated mutual funds are still the preferred packages. But CITs—less regulated, cheaper, and more easily-customized than mutual funds—now house 42% of 401(k) investments.

That makes CIT trustees the potential gatekeepers to defined contribution plans for private market asset managers. They can also serve as consultants, helping asset managers design their products to meet 401(k) regulatory requirements for liquidity and transparency.

Private credit and other alternatives have long been offered in the largest 401(k) plans. But, over the past decade, asset managers have assumed much of lending to high-risk, middle-market, they see the $9 trillion in 401(k) plans as a potential major source of financing for entities that make and manage those loans.

Big asset managers like Apollo and BlackRock have heavily promoted private credit for 401(k) plans in white papers and webinars. They emphasize private credit’s potential to increase yield and diversify risk when added in small doses to target-date strategies. They discount its alleged drawbacks—illiquidity and unsuitability for unsophisticated retail investors—as myths.

The Trump administration helped alternative asset managers last August with an executive order that encouraged their inclusion in retirement plans. Just this week, the Department of Labor proposed a new legal “safe harbor,” not unlike the 2019 safe harbor for annuities, that could calm plan sponsors’ fear of exposing participants to new risks and inviting lawsuits.

But not everyone is a fan of private credit. The mass of plan sponsors and participants aren’t demanding them. Big-megaphone news outlets, like the Financial Times, the New York Times and Bloomberg, and even a few asset managers, warn that private credit may be in a price “bubble” that makes their introduction to 401(k)s especially inauspicious. This week, Democratic lawmakers weighed in against alternatives for 401(k) plans.

Given the stakes and the attention that’s converging on alternatives, asset managers need to get it right when pitching new investment options to 401(k) plan sponsors and their consultants. CIT trustees believe they’re the best navigators.

“For private credit managers and other general partners within private markets, the CIT wrapper is the only vehicle that makes sense to gain access to this market,” Christopher Speer of FIS Reliance Trust told RIJ. Without a bank or trust company willing to take on the trustee role, these managers can’t reach the DC market at scale.”

More customizable

CITs are defined as pooled-investment vehicles managed with a common investment strategy that are organized as trusts and maintained by a bank or trust company. CITs have nearly quadrupled their total DC assets, to $3.8 trillion, in the last decade, according to Morningstar.

Mutual fund assets in DC plans grew 63%, to $3.4 trillion from $2.1 trillion over that span. Their market share dropped to 38% from 48%. CITs  almost doubled their market share relative to mutual funds, to 42% from 23%.

According to “The ABCs of CITs: A Foundational Guide,” from the Retirement Research Center at the Defined Contribution Institutional Investors Association, or DCIIA, “CITs allow investors to have access to certain types of assets that are difficult or impossible for mutual funds to hold. For example, a CIT has considerably more flexibility to invest in annuities and alternative investments (e.g. private real estate, private equity, private credit, and infrastructure). Stable value funds are not offered in mutual fund format and are only available through CITs or separate account vehicles.”

“For private market assets in DC plans, the CIT is a better option than the mutual fund in many ways,” SEI’s Randall told RIJ. “One of the most important difference is the relative ease with which you can create different share classes.

“It allows you, within the bounds of ERISA, to differentiate between investors as long as you can demonstrate the efficacy of the services. We can launch a single CIT that buys one or more private market vehicles. Then you can establish multiple share classes to serve different market constituents.”

Creating customized share classes that allow different segments of a participant population to pay different prices for the same underlying investment strategy is much faster and easier within a CIT wrapper than within a mutual fund, he said.

As long as the CIT trustee shows that a higher expense is justified—by the provision of more complex services, for instance—the differences in fees won’t violate ERISA, America’s main pension law. This flexibility is said to be one of the biggest reasons CITs have taken share from mutual funds in defined contribution plans.

Randall disagrees with accusations that private credit is in a bubble. He believes that the private credit pools are deep, with many opportunities for diversified portfolios. “When I look at the [loans in the vehicles managed by] the industry as a whole, the underlying credits are diverse. They’re much broader and deeper than just A.I.,” he told RIJ. The fund managers are aware of concentration risk.”

‘Look like a bond’

Private credit won’t be entering 401(k) plans in undiluted, high-risk form. Target-date solutions, where most participant contributions go and where alternative asset purveyors want to be, might allocate only about 5% of flows to private credit sleeves. “I would remind the plan sponsors that they’re [private credit] not ending up as individual selections in an individual investment line-up. We’re talking about allocations to managed accounts or TDFs,” Randall said.

Instead of plan participants buying loans to high-risk companies, they would invest a small part of each paycheck’s 401(k) deferral in structures that package risky loans and convert their cash flows into a bond-like investment. “Everything wants to ‘look like a bond,’” said Conning consultants in a recent webinar, instead of like something new and unfamiliar.

These structures are types of special purpose vehicles. They’re widely known by their acronyms. “A CIT can buy a tender fund, a BDC (Business Development Company), an IDF ( Industrial Development Fund). “The structures are getting increasingly complicated increasingly quickly,” Randall said. “All have different levels of liquidity and different gating procedures.”

A CIT trustee can help choose a structure that meets many of the requirements—liquidity, daily valuations, low cost—that plan sponsors bear under [the Employee Retirement Income Security Act of 1974].

“As trustee we screen the underlying manager, take on ongoing oversight of valuation and liquidity governance, and coordinate all of the underlying complexities within these funds,” Christopher Speer at FIS said. “With the DOL announcement all of that is of utmost importance when these folks are trying to gain access to these ERISA sponsors.”

‘The argument in favor of private credit’

Randall sees two major categories of private market purveyors: The big Wall Street firms who are relatively new to the 401(k) space and the asset managers with a long history as vendors (defined-contribution investment-only fund companies) to 401(k) plans.

“Traditional pure-play private-market folks, who are newer to the defined contribution marketplace, say, ‘We’re going to win the race for DC assets because nobody knows the credits better than we do.’ Then there are investment companies with track record of providing funds to plans, who say, ‘Given our long-term presence in this space, we know the DC distribution better than anyone. We know the customer.’ It will be interesting how it shapes up,” Randall said.

How much might plan participants benefit from a pinch of private credit in the target-date strategies or managed accounts where private credit purveyors want to be?

“The argument in favor of putting private credit in 401(k) plans is pretty simple. Your participants can gain access to a class of securities heretofore available only to large institutional investors, allowing them to improve their overall risk-adjusted returns,” Randall said.

Pension funds, university endowment funds, and other large pools managed by professional investors have long used alternatives to diversify risk and increase yield over long holding periods. But many plan participants don’t have long holding periods. They change jobs and join new retirement plans, take hardship withdrawals, and borrow against their 401(k) balances.

Then there’s the unknown factor of costs. For a plan sponsor, using CITs can be cheaper than using mutual funds. That’s partly what drove the migration of CITs into 401(k) plans in the first place. On the other hand, there are many layers to the private credit packaging, which means more stakeholders and service providers to pay.

The private credit industry, in order to keep growing at a high rate, needs the permanent capital that 401(k) plan participants could provide. But Randall told RIJ that the “time to get to scale [in 401(k) plans could take a while.”

That is, if target-date strategies and managed accounts are only half of a plan’s assets, if they allocate only five percent of their flows to private credit, and if too many private credit managers are competing for the same types of pools of savings, then turning 401(k)s into billion-dollar sources of “permanent capital” probably won’t happen overnight.

© 2026 RIJ Publishing LLC. All rights reserved.

What America pays for health care in retirement: Healthview

Posted on March 3, 2026 by -

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.

© 2026 RIJ Publishing.

Private Credit Anxiety and the Bermuda Triangle

Posted on March 3, 2026 by -

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.

© 2026 RIJ Publishing LLC.

 

Bulletin Board

Posted on March 3, 2026 by -

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.

© 2026 RIJ Publishing LLC.

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

Posted on March 3, 2026 by -

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.”

© 2026 RIJ Publishing LLC. All rights reserved.

News from the Bermuda Triangle

Posted on February 25, 2026 by -

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.

© 2026 RIJ Publishing LLC.

 

Who Really Owns Your Investments?

Posted on February 25, 2026 by -

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:

  1. Clearing and netting occur
  2. Collateral is applied to secured and derivatives-related claims
  3. Residual assets remain, if any
  4. 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.

© 2026 David Macchia. Reprinted by permission of the author.

Bulletin Board

Posted on February 3, 2026 by -

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.

© 2026 RIJ Publishing LLC. All rights reserved.

Private Credit News

Posted on February 3, 2026 by -

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 -

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.

© 2026 RIJ Publishing LLC. All rights reserved.

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

Posted on February 3, 2026 by -

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]

© 2026 RIJ Publishing LLC.

Kyle Busch’s Crash Course in IUL

Posted on February 3, 2026 by -

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.

© 2026 RIJ Publishing LLC. All rights reserved.

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

Posted on February 3, 2026 by -

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.

© 2026 RIJ Publishing LLC. All rights reserved.

When Private Equity Owns Both Sides of Your Transaction

Posted on February 3, 2026 by -

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.

© 2026 Peter Dziedzic. Reprinted with permission of the author.