In today’s financial market, there are two types of money managers: those with an insurance arm and those looking to acquire one. Private equity firms have been in a race to replicate the success of Apollo’s annuities business, which sells retirement and life insurance policies that pay out over the long term while investing the cash into their own deals. Major firms such as KKR, Carlyle, Brookfield, Blackstone, Ares, Sixth Street, Blue Owl and Golden Gate either own or have partial ownership of life insurers. BlackRock is also reportedly seeking a minority stake in a life insurer.
As of last summer, US private equity firms owned 137 insurers and controlled a significant portion of policyholder payouts. This trend has dramatically changed the landscape of Wall Street by funding corporate buyouts and credit card portfolios. Some firms like 777 have taken this model further by investing policyholders’ funds into riskier ventures such as European sports teams and payday lending. The financial struggles of firms like 777, which recently hired bankruptcy advisers, have drawn scrutiny from competitors and regulators on the private equity industry’s rush into the insurance sector.
In recent years, private equity firms have been increasingly looking to expand their reach beyond traditional asset management services to include insurance offerings. This has led to a surge in interest in buying existing insurance companies or setting up new ones with their own capital. Many major private equity firms are now part-owners of life insurers in the US through either full or partial ownership stakes.
The trend towards more private ownership in the insurance industry is not without its risks. Some critics argue that private equity firms may be more focused on short-term profits than long-term sustainability for their investments in life insurers.
One such firm that has faced scrutiny for its approach to private ownership in the insurance industry is 777 Partners. As of last summer, 777 was reportedly one of the largest owners of US insurers among private equity firms.
However, recent reports suggest that things may not be going so well for this company. According to sources close to 775 Partners, they recently hired bankruptcy advisers after suffering significant losses from investments made under their new strategy.
This news has sparked concern among competitors and regulators about whether or not this rush towards private ownership in the insurance industry is sustainable in the long run.
Despite these concerns though, many investors continue to see potential returns from investing in private equity-owned life insurers. In fact, according to market data from S&P Capital IQ Market Insights Group, some of these companies have seen impressive growth rates over the past year alone.
Overall though it seems that while some are making money others are facing financial struggles but it’s clear that Private Equity Firms are becoming more involved with Insurance sector day by day
