You pay your life insurance premiums. You put money into an insurance policy. You do the responsible thing.
And along the way your money ends up in some interesting places. At one KKR-owned insurer, your premiums are financing a fleet of airplanes, a portfolio of freight trains, somebody’s rooftop solar panels, and up to $300 million in home improvement loans. All from a single filing. Apollo, which owns the largest PE-backed insurer in America, has its insurance arm co-originating mortgages on 26 parking garages across nine cities and apartment buildings in Brooklyn, while the broader Apollo machine buys Yahoo, Caesars Entertainment, cruise lines, and vacation timeshare resorts. At another insurer owned by Todd Boehly’s Eldridge, a quarter of the company’s $49 billion in invested assets are loaned back to entities controlled by the same billionaire — the song catalogs of Bruce Springsteen and The Killers, Dick Clark Productions, and the production company behind Ozark and House of Cards.
I’m not making this up. Let me walk you through it.
This is about private equity doing private equity things. It is no secret that I dislike most private equity so keep that in mind.
Why This Matters More Than You Think
We ignore life insurance companies. Not car insurance or health insurance. Those are in our face every month. I’m talking about the big life insurers. The ones where you signed up for a policy years ago, set up the auto-pay, and forgot about it. You don’t think about it because you hope you’ll never need it.
That’s exactly how it’s supposed to work.
Life insurance is one of the oldest and most sacred financial relationships that exists. You pay premiums. The company makes you a promise. If the worst happens, they write a check. If you’ve been building an annuity for retirement, they’ll be there with the money when you stop working. That promise is the whole product. You’re buying a guarantee about the future.
Here’s the economics behind the scenes. When you pay your premium, the company doesn’t stuff it in a vault. It invests that money. The gap between when premiums come in and when claims go out is called the “float.” For a life insurer, that float can last decades. The company earns investment income the entire time. Warren Buffett built Berkshire Hathaway on this concept. He called insurance float “money that doesn’t belong to us but that we get to invest.”
For generations, insurers invested that float in boring things. Government bonds. Investment-grade corporate debt. Conservative mortgages. They didn’t swing for the fences because the downside of missing wasn’t a bad quarter. The downside was a widow not getting her death benefit and the executives needing to close the executive dining room.
Now imagine you lose a spouse. The grief is already overwhelming. But at least you did the responsible thing. You paid those premiums. There’s a number to call. The financial part of this nightmare was supposed to be handled.
Now imagine the claim doesn’t get paid. Or you get a letter from a state regulator explaining that your insurance company is insolvent. Wait a gosh darn minute here buddy, we had a deal.
That makes the worst day of someone’s life significantly worse.
This is about whether the promise gets kept.
What’s Happening
There are 137 insurance companies in America owned by private equity firms. Together they control over $700 billion in invested assets. That number has more than doubled since 2018.
The playbook is the same every time. PE firm buys the insurer. Installs its own investment team. Rotates the safe boring bonds into private loans, structured credit, and deals the PE firm originates itself. Sets up a Bermuda reinsurer to move liabilities offshore. The insurer becomes a captive buyer for the PE firm’s loan production. The spread between what they earn and what they pay policyholders is the profit engine.
A few quick definitions so you can follow:
Surplus is the company’s financial cushion. Assets minus liabilities. More is better. Think of it like equity in your house.
Affiliated transactions are when the insurer does business with other companies in the same corporate family. KKR owns the insurer AND originates the loans the insurer buys. Same family, both sides of the deal.
Level 3 assets are investments with no observable market price. The company tells you what they think it’s worth.
PIK interest (Paid-In-Kind) is when a borrower doesn’t pay cash interest. The interest gets added to the loan balance. The income statement looks great. The insurer doesn’t get the Venmo notification.
Mezzanine loans sit behind the first lien holder. If the property value drops, the mezzanine lender takes the first loss.
The Receipts: One Company’s Filing
I pulled the full 163-page statutory filing for First Allmerica Financial Life Insurance Company, a subsidiary of Global Atlantic, which is 100% owned by KKR. Here’s what I found. (Old life insurance company names make me think of someone like Thomas Jefferson planting a flag on top of a hill and declaring “This shall be the First Allmerica Financial Life Insurance Company” while an eagle circles overhead.)
The surplus cushion is almost nonexistent. $147.8 million in surplus on $15.75 billion in assets. Under 1%. The unassigned surplus (the part not propped up by KKR writing checks) is negative $252 million.
The portfolio was completely transformed in four years. Bonds dropped from 93.8% of invested assets in 2021 to 65.5% in 2025. Mortgage loans went from 0.2% to 25.9%. That’s a 130x increase.
Affiliated investments exploded from $15 million to $2.8 billion. A 186x increase. The insurer is lending to a constellation of KKR-controlled entities financing aircraft, rail assets, equipment, solar loans, data centers, medical office buildings, and middle-market loans. Every deal originated by KKR or its affiliates.
45% of the portfolio is priced by them. About $5.88 billion in Level 3 assets. No independent market price to check against. KKR determines the carrying value.
$10.6 billion sits under reinsurance treaties with offshore entities. That’s 67% of total assets held under treaties with reinsurers that aren’t licensed in the company’s home state. The ultimate parent is a Bermuda corporation.
$45.2 million in PIK interest is sitting in loan balances. Income was recorded but the company didn’t approve the Venmo request.
The last comprehensive regulatory exam was 2019. Six years ago. It was conducted as a group exam with parent company Commonwealth Annuity before KKR took full control. Everything I just described happened after that exam was completed.
About Those Mortgages
Insurance companies have held mortgage loans for over a century. A well-underwritten mortgage on a stabilized property at a conservative loan-to-value is a perfectly appropriate asset. Northwestern Mutual holds them. New York Life holds them. That’s not the issue.
The issue is what kind of mortgages.
FAFLIC’s mortgage book includes $480 million in mezzanine loans (first loss position), $1.14 billion lent to KKR affiliates (up from zero in 2021), and a disclosed maximum loan-to-value of 100%. Traditional insurance company mortgage lending runs 60-75% LTV. At 100%, any decline in value puts the lender underwater from day one.
The commercial book shows zero delinquencies. That either means the underwriting is bulletproof or loans are being restructured before they technically default. The industry calls that “extend and pretend.”
It Isn’t Just One Company
Athene (Apollo): $331 billion in assets. In 2024, 100% of its $192 billion in Bermuda reinsurance came from its own affiliates. Not a single dollar of third-party reinsurance. Unassigned surplus: negative $1.87 billion.
Security Benefit (Todd Boehly’s Eldridge Industries): A quarter of its $49 billion in invested assets, roughly $11.8 billion, was in collateral loans to other Boehly-controlled entities. More affiliated collateral loans than every other U.S. insurer combined. 43% of its assets are related-party investments.
A former Oklahoma Insurance Commissioner described these arrangements as “IOUs between family members.” (I imagine the scene in Dumb and Dumber when Jim Carrey hands over a briefcase filled with IOUs. Don’t you worry every single cent is accounted for.)
Here’s the thing. Even Athene’s own investor filing tried to make itself look reasonable by pointing out how much worse the other guys are. Their slide deck showed related-party assets as a percentage of total investments: Athene at 12%, KKR’s Global Atlantic at 22%, Brookfield’s American National at 30%, Blackstone’s Everlake at 35%, and Security Benefit at 43%. When your defense is to try and persuade regulators to look at your competitors instead of ask you hard questions, not a good sign.
The offshore reinsurance pipeline for the entire industry hit $1.1 trillion in 2024. More than a trillion dollars in liabilities moved beyond the full reach of U.S. state regulators. Praise the heavens above it was moved to Bermuda instead of some place sketchy.
Now Compare That to the Mutuals
Here’s the comparison that tells the whole story.
Northwestern Mutual (mutual, no PE ownership): ~$324 billion invested. Surplus over $40 billion. That’s roughly a 12% cushion.
New York Life (mutual, no PE ownership): $463.5 billion total assets. Surplus of $34.7 billion. About a 7.5% cushion.
Now the PE-owned carriers:
Athene (Apollo): Surplus as a percentage of total assets: ~1.2%. Unassigned surplus: negative $1.87 billion.
FAFLIC (KKR): Surplus as a percentage of total assets: ~0.94%. Unassigned surplus: negative $252 million.
Northwestern Mutual holds a 12% cushion. FAFLIC holds under 1%.
Different ownership. Different incentives. Different cushion.
What Could Go Wrong
None of these are predictions. All of them are plausible.
A credit cycle hits private credit. These portfolios were built in a rising market and have never been stress-tested. An insurer with a 1% surplus cushion has almost no room to absorb write-downs. Policyholders hear the news, start surrendering annuities for cash, and the insurer has to sell illiquid assets at fire-sale prices. That’s a liquidity spiral.
The Bermuda entity can’t pay. An insurer has ceded billions to its own affiliated reinsurer offshore. If that entity runs into trouble, the U.S. guaranty fund system was designed for U.S.-domiciled carriers. The ability to chase assets through a Bermuda holding company in a crisis is untested at this scale.
The dominoes fall together. It’s 137 companies controlling $700 billion, all running the same playbook. A broad credit event hits them simultaneously. State regulators work insurer-by-insurer with no federal authority that sees the whole picture. Different instruments than 2008. Same structural vulnerabilities: leverage, illiquidity, interconnection, and the assumption that asset prices only go up.
The Bottom Line
The assets backing your policy look nothing like they did ten years ago. The risk is more concentrated, more affiliated, more illiquid, and more connected to the private equity firm’s own business interests.
Returns always look good in a rising market. The real test of an insurance company isn’t what it earns when everything goes right. It’s whether it can pay when everything goes wrong.
I pulled the receipts. Now you’ve seen them too.
Sources
FAFLIC Statutory Filing — First Allmerica Financial Life Insurance Company, Annual Statement for the Year Ended December 31, 2025. Filed with the NAIC and Massachusetts Division of Insurance.
NAIC PE-Owned Insurer Report — “Private Equity-Owned U.S. Insurer Investments Increased at Year-End 2024,” NAIC Capital Markets Bureau, August 2025.
Athene Corporate Structure & Related Party Data — Athene Corporate Structure Overview, July 2025 Update. Related Party Investments, Athene Holding Ltd., August 2025.
Security Benefit / Eldridge — “Boehly’s Insurer Reaps Gains and Doubts From Loans to His Firms,” Bloomberg, December 20, 2024.
Offshore Reinsurance — “Offshore reinsurance tops $1 trillion for US life sector,” Insurance Business Magazine, May 21, 2025. “The Offshoring of America’s Retirement Savings,” Bloomberg, November 2025.
AM Best — “Affiliated Investments Surge Among US Life/Annuity Insurers,” AM Best, December 2025.
Northwestern Mutual — 2024 Annual Report, February 2025.
New York Life — “Record 2025 results underscore New York Life’s financial strength,” March 2026.
NAIC Private Equity — NAIC Insurance Topics, Private Equity.
FAFLIC Group Examination Report (2019) — Commonwealth Annuity and Life Insurance Company group financial examination, as of December 31, 2019. Massachusetts Division of Insurance, released May 2021.