Why It Matters
The rapid growth of private equity (PE) involvement in the U.S. insurance industry and the financial stability risks it may pose to policyholders, regulators, and Congress is under scrutiny in a new Congressional Research Service (CRS).
PE-owned insurers grew from approximately 25 in 2017 to 139 in 2024, a dramatic expansion in the number of carriers operating under private equity ownership.
PE-owned insurers held approximately $700 billion in cash and invested assets in 2024, representing 7.8 percent of the U.S. insurance industry total.
For the Trump administration and Congress, the report surfaces a structural tension: insurers are regulated solely by the states, with no federal regulator equivalent to those overseeing banks or capital markets, even as the risks embedded in these portfolios grow in scale and complexity.
The Big Picture
The U.S. insurance industry held approximately $9.6 trillion in cash and invested assets in 2025, including $224 billion in PE and $132 billion in hedge funds, while life insurers' private credit investments totaled $849 billion, or 14 percent of their balance sheets, in 2024.
CRS identifies four ways PE-owned insurers differ from independent insurers: they allocate larger shares to illiquid private assets, are twice as likely to invest in assets originated by their own parent companies, rely more heavily on private credit ratings, and make greater use of offshore reinsurance arrangements.
On affiliated investments, some PE-owned insurers had between 11 percent and 37 percent of their portfolios in assets tied to their parent companies, compared with a 7 percent industry average. Private credit ratings covered between 22 percent and 38 percent of PE-backed insurers' bond portfolios versus a national average of 12 percent, and the report notes that research finds these private ratings systematically understate credit risk, thereby reducing regulatory capital requirements.
Offshore reinsurance compounds the concern, with approximately $928 billion of reinsurance in 2024 reportedly involving Bermuda-based reinsurers operating under regulatory requirements that differ from those in the United States.
National coordination of insurance regulation is undertaken by the National Association of Insurance Commissioners (NAIC), a standards-setting organization, but NAIC model laws carry no legal effect until enacted by individual states.
The report notes the potential role of the Financial Stability Oversight Council (FSOC) in broader interagency approaches to managing risks from private equity-insurance interconnectedness, and identifies the Securities and Exchange Commission (SEC) as the primary capital markets regulator relevant to private investment oversight.
The Bottom Line
The report notes that insurers are chartered and regulated solely by the states, with no federal regulator akin to those for banks and capital markets, and that PE-owned insurers' growing reliance on affiliated investments, offshore reinsurance, and private credit markets has drawn attention from Congress and financial regulators.
The report raises the possibility of establishing a new federal insurance regulator or enhancing federal coordination capabilities. Whether FSOC, the SEC, or a new body takes a more active role will depend on decisions the Trump administration and Congress have yet to make.
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