Beware of Private Equity Gobbling Up Life Insurance and Annuity Companies
January 31, 2023 by Eileen Applebaum
Private equity (PE) firms have had their eye on individual retirement savings since 2013 when they were first allowed to market directly to individuals. Pension funds already allocate workers’ retirement savings to PE firms, which use these assets to fund a range of risky equity and debt investments. Access to personal retirement savings, including IRAs and 401(k)s, would open up a huge new source of capital for PE.
Click HERE to read the full story via CEPR
Wink’s Note: I have been reading this new paper by the Center for Economic and Policy Research, about private equity’s move into the life insurance business.
Interestingly, it suggests that PE firms are emulating Warren Buffet’s practices of funding investments with his insurance arm. I never thought of it that way.
Mark Weisbrot and Dean Baker (who I cannot tag for some reason) started the CEPR and have stated that “The public education portion of CEPR’s mission is to present the findings of professional research…in a manner that allows broad segments of the public to know exactly what is at stake in major policy debates. An informed public should be able to choose policies that lead to improving quality of life…”
“Given these new developments, new regulations are clearly needed to protect the retirement savings of holders of life insurance and annuity policies.” It sounds like a cry to the National Association of Insurance Commissioners (NAIC).
“Opportunities for corrupt self-dealing are widely available as PE firms can use the insurance assets to shore up the finances of failing or struggling funds they own.” YIKES!
Interested in your thoughts, as PE-backed insurance companies account for a large percentage of sales for annuities, in particular. -sjm
