Buyout barons' insurance pots are due a shakeup
APO•Private equity-owned insurers amassed roughly $696 billion in assets and earned higher average net spreads than traditional annuity providers in 2024, but falling credit spreads and weaker annuity sales are squeezing returns. Industry executives expect a shakeout, with some smaller players potentially exiting or merging.
1. Private equity enters insurance
Private equity firms built a roughly $696 billion insurance war chest, investing premiums in higher-yielding assets and non-bank lending. Wharton researchers counted 139 private equity-owned U.S. insurers in 2024; those firms put about 40% of each new investment dollar into structured securities, compared with under 20% at independent firms.
2. Returns face pressure
Private equity-owned groups earned an average net spread of roughly 1.6% in 2024, versus less than 1% for traditional annuity providers. But traditional fixed-annuity sales growth flatlined after 2023, and in 2026 sales among providers outside the top 20 were down 25%; sales at the five largest players fell 10%. Credit spreads have also narrowed, while payouts remained expensive.
3. Shakeout may follow
Apollo’s Retirement Services net investment spread fell from 1.9% in 2023 to 1.6% in 2025, while the U.S. insurance industry’s pretax operating return on average equity declined from nearly 13% in 2023 to just over 8% so far this year. Industry executives expect weaker returns to drive exits and mergers. Corebridge Financial and Equitable Holdings announced a $22 billion tie-up, citing $500 million in expense savings and technology modernization.
