Sen. Warren concerned about private equity’s growing life insurance role

Sen. Elizabeth Warren is pressing insurance regulators on how they oversee the industry's growing use of private equity and private credit.

By Noah Lopez

The growing role of private equity and private credit in the life insurance industry is drawing scrutiny from policymakers.

Questions center on how insurers' investments are monitored and whether existing oversight keeps pace with changes in the market.

In a Sept. 11 letter, Sen. Elizabeth Warren, D-Mass., asked the National Association of Insurance Commissioners how state regulators are overseeing the growing ties between insurers and private investment firms.

In her letter, Warren questioned whether existing regulatory frameworks are keeping pace with changes in insurers' investment portfolios and ownership structures.

She cited data showing life insurers' private credit holdings grew from approximately $386 billion in 2014 to $849 billion in 2024.

Warren said the growth warrants closer examination because some private credit investments can be less liquid and harder to value than publicly traded assets.

Private credit generally refers to debt investments that are not publicly issued or traded, including direct lending, private placement bonds and privately rated securities.

She also called for a better understanding of whether additional safeguards are needed to address potential risks to policyholders and insurance markets.

"Congress needs to understand the current regulatory gaps federal policymakers must address to better mitigate the risks private credit poses to the insurance markets and policyholders," Warren wrote.

Private equity's expanding presence

Warren's concerns come as private equity firms and alternative asset managers have expanded their presence in the insurance industry through acquisitions, partnerships and investment management arrangements.

Recent events involving Delaware Life illustrate the concerns. The insurer disclosed this year that it had misclassified a material portion of its private-credit investments as unaffiliated, resulting in affiliated investments accounting for 39% of its general-account invested assets as of June 30.

Delaware Life has since agreed to exchange up to $6.5 billion of those investments for non-affiliated assets.

Life insurers have increased their allocations to private credit while seeking returns to support long-term obligations, including annuity and life insurance benefits.

Private equity-backed insurance platforms have also grown, increasing the connections between insurers, investment managers and private markets.

Warren questioned whether regulators are adequately addressing the risks associated with those relationships and what additional measures may be needed as investment strategies evolve.

NAIC outlines oversight efforts

In a Sept. 24 response, the NAIC said state insurance regulators have spent years updating oversight standards to address changes in insurers' investment strategies, ownership structures and risk-transfer arrangements.

The organization outlined several initiatives, including enhanced reporting requirements for private investments, expanded disclosures involving related-party transactions and updated capital standards.

The NAIC also cited Actuarial Guideline 53, which addresses how insurers test complex investments, and Actuarial Guideline 55, which addresses certain reinsurance transactions.

The measures are intended to give regulators greater visibility into insurers' investment portfolios and affiliated transactions while helping ensure companies maintain sufficient capital to meet policyholder obligations.

"Rather than relying on a static regulatory framework, regulators have regularly updated capital requirements, reporting standards, supervisory tools, and analytical capabilities to address emerging risks while maintaining a consistent focus on insurer solvency and policyholder protection," the NAIC wrote.

Oversight of insurer investments

The exchange raises questions about whether existing insurance regulations adequately address the industry's growing use of private credit and the relationships between insurers and private investment firms.

Warren's letter pointed to the increase in life insurers' private credit holdings over the past decade.

The NAIC, meanwhile, defended the state-based regulatory system and outlined changes intended to improve oversight of complex investments and affiliated transactions.

The NAIC said insurers will face standardized reporting requirements for private investments beginning with year-end 2026 financial statements.

The changes are intended to give regulators more detailed information about investment structures, valuations and reliance on private credit ratings.