Last Updated: 10/24/2025
 

Background: Private equity (PE) has an increasing presence in the insurance industry. The relationship between PE and the insurance industry has emerged in two directions. First, U.S. insurance companies—particularly life insurers—invest in PE to increase the return on their balance sheet portfolios. This activity accelerated during the extended period of low interest rates following the 2008 financial crisis and up until late 2021 (interest rates have since come down but remain well above the level in 2020 and early 2021).[1] Second, PE firms are increasingly investing in insurance companies and, in many cases, taking full ownership of the companies.

What Is Private Equity?
PE is capital put at risk to invest in businesses, business ventures, funds (such as loan funds), or other assets that are not listed on open, public exchanges (hence, “private”).¹ PE firms are investment management companies, and the investments of these firms usually (but not always) take the form of a PE fund. Most PE funds are limited partnerships. A general partner (GP) manages the fund’s investments, and limited partners (LPs) are investors in the fund. LPs typically are sophisticated institutional investors or high-wealthy individuals.[2]

While PE funds, as they are known today, have existed since the 1980s, their growth has been exceedingly rapid, especially since the 2000s. In 1980, there were 24 PE funds; in 2015, there were roughly 8,300 PE funds; and by end-2023, the number of PE funds had soared to more than 23,000.[3] Perhaps more astounding is the growth in total assets under management (AUM).[4] (Refer to Figure 1) In 2000, PE firms in the aggregate held $610 billion in AUM. By 2024, that figure had surged to about $9.8 trillion. Preqin suggests that aggregate AUM will soar to about $12 trillion globally by 2029.[5]

Figure 1. Assets Under Management by Private Equity Firms

Source: Preqin
Note: The 2029 figure is a Preqin forecast at approximately $12T. See Preqin, Future of Alternatives 2029 (requires a subscription to Preqin Insights+).

PE funds carry several risks and are often characterized as “alternative investments."[6] PE funds face significant liquidity risk. Because they are not traded on open, public exchanges, they are not readily exchangeable for cash. Also, investors are subject to irrevocable commitments to the fund for a specified period. Traditionally, these commitments have not been tradable, but that is changing as the PE industry evolves.

PE fund investors also are subject to “blind risk.” This type of risk happens when investors’ commitments fund unknown, future investments. As with any equity investment, whether public or private, PE funds are also susceptible to market risk (or price volatility) and, therefore, the possibility of a realized loss of original capital (upon the fund’s termination). And as with any fund, whether public (e.g., a mutual fund) or private, there is selection risk or the risk that the GP does not make good investment choices. Finally, more unique to PE funds, and private funds in general, is that risk can be magnified, possibly several times over, by leverage. A leveraged investment uses borrowed capital to finance investment in an asset.

PE firms, if not exempt, are subject to regulation by the U.S. Securities and Exchange Commission (SEC) and possibly other authorities, such as the Financial Industry Regulatory Authority (FINRA) and the Commodity Futures Trading Commission (CFTC), but they are regulated differently from public investments.[7] In particular, PE investors do not benefit from some of the protections offered to public market investors.

PE-Owned Insurers
Since the financial crisis of 2008, PE firms have become some of the most active participants in insurance sector merger and acquisition (M&A) activity.[8] PE firms’ involvement in insurance dates back to the purchase of discounted blocks of business from legacy U.S. carriers in 2008–2009.[9] PE’s entrance into the insurance sector is largely due to the long-lasting low interest rate environment that proceeded the financial crisis, lasting until late 2021.[10] This low interest rate environment incentivized insurers to sell or reinsure blocks of business to improve profitability and to optimize capital management. PE firms offer insurers opportunities to achieve higher investment returns (albeit at higher risk) and gain access to capital and asset sources through PE capital markets networks. At year-end 2024, the number of private equity PE-owned U.S. insurers identified by the NAIC Capital Markets Bureau was 137, which was the same as year-end 2023. The number had increased to 139 by June 2025.[11]

PE firms’ activity in the insurance sector is not limited to buying blocks of business. PE firms also purchase insurance firms outright. PE firms are most interested in life and annuities insurance firms because of the predictable and steady returns from these companies.[12] In addition to adding diversifying assets to their portfolios, PE firms generate fee income from investment management fees. Life insurance companies accounted for about 95% of PE-owned insurers’ cash and invested assets at year-end 2021.[13] However, property/casualty (P/C) insurers also are attractive to PE firms because of renewals and minimal capital expenditures. PE interest in health insurance also is increasing.

Status: Various committees, task forces, and working groups, as well as other state insurance regulators and NAIC staff, closely monitor the PE investments of insurers to ensure they meet regulatory requirements and earn a reasonable return without undue risk. The NAIC also monitors PE investments to ensure the primary objective of these investments is adequate capital to pay claims and maintain other fiduciary responsibilities to policyholders. Most NAIC activity around PE, however, is focused on PE ownership of insurance firms.

In 2013, Form A reviews guidance was added to the NAIC Financial Analysis Handbook for when a PE owner is involved, although these considerations are not limited to PE acquisitions.[i] The guidance provides examples of stipulations, both limited time and continuing, that regulators can use when approving the acquisition to address solvency concerns, as well as for use in ongoing solvency monitoring.

One of the Macroprudential (E) Working Group‘s (MWG) 2026 proposed charges is to:  Monitor domestic and global activities including those enumerated in the “Plan for the List of Macroprudential Working Group (MWG) Considerations document.

The 13 Considerations document identifies activities including those frequently associated with private equity (PE) ownership that may affect the U.S. Insurance Industry. (Refer to “2026 Proposed and 2025 Adopted Charges” at left on the Macroprudential (E) Working Group landing page).  The continuously updated 13 Considerations document may also be found in the documents section of the MWG website.

The MWG established its 13 Considerations to monitor the various activities associated with Private Equity owned insurers.  The 13^th Consideration around cross border reinsurance remains an area of continued focus and monitoring.  Several Considerations have resulted in enhanced Annual Statement disclosures, mostly in the investment schedules.  Many of these new disclosures provide for greater transparency around the private equity firms’ ownership of an insurer and its affiliated investment manager and related involvement with structured security origination and investments therein.