Buyout barons' insurance pots are due a shakeup
APO•Private-equity-owned insurers built a roughly $696 billion pool of assets, but competition and shrinking credit spreads are squeezing returns. The article says smaller players may exit or merge as annuity sales weaken and insurers face pressure on investment spreads.
1. Private equity’s expansion
Private-equity firms expanded into insurance, with 139 U.S. insurers owned by private-equity groups by 2024, according to Wharton researchers. These insurers invest about 40% of each new investment dollar in structured securities, compared with under 20% for independent firms.
2. Spreads 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 flattened after 2023, and so far in 2026 sales have fallen 25% for the median provider outside the top 20 and 10% for the five largest players. Yields on corporate and asset-backed loans, as well as credit premiums, have narrowed while payouts remained high.
3. Possible industry shake-up
Apollo’s Retirement Services net investment spread fell from 1.9% in 2023 to 1.6% in 2025, while MetLife’s spread excluding variable income slipped from about 1.4% to just under 1%. Industry executives expect tougher conditions to force some insurers to stop writing policies or merge. Blackstone-backed Corebridge Financial and Equitable Holdings announced a $22 billion tie-up, citing $500 million in expense savings and technology modernization.
