Insurers are directing proceeds from record sales of fixed indexed annuities into higher-yielding private credit investments managed by private equity firms. The strategy helps insurers offer competitive returns on annuities that protect principal, while giving asset managers a steady, long-term source of funding—often called permanent capital—for lending.
Private equity-owned life insurers dominate this pipeline. Apollo, through Athene, and KKR, through Global Atlantic, are leading players. Their vertically integrated models have helped them gain significant market share in the annuity business.
Life insurers now hold more than $800 billion in private, illiquid bonds. The strategy is drawing increased regulatory scrutiny over the opacity of these assets and the risks of investing in affiliated funds.