February 26, 2026

Is Your Annuity Backed by Wall Street’s Riskiest Bet? The Private Credit Crisis Hiding in Plain Sight

Private equity firms now control or influence over $700 billion in life insurance assets. One-third of the industry’s $6 trillion portfolio has quietly shifted into private credit and illiquid investments—and no one has ever stress-tested these positions in a full credit cycle downturn. Here’s what every annuity holder needs to know.

If you own an annuity, you probably chose it for one reason above all others: safety. Essentially, you wanted a guaranteed income stream, a promise backed by a life insurance company with a century-long track record, and a foundation you could build a retirement on.

However, over the last decade, a seismic—and largely invisible—shift has transformed the life insurance industry from the inside out. Private equity firms have acquired, invested in, or partnered with an increasing number of the insurance companies that back your annuity contracts. Along the way, they’ve dramatically changed what those companies invest in to generate the returns that fund your guarantees.

Specifically, the shift moves from traditional, liquid, publicly rated bonds toward private credit, structured loans, and illiquid alternative assets—investments that can deliver higher yields in good times but carry risks that are harder to measure, harder to sell, and harder to survive in a sustained economic downturn.

Why This Should Be on Your Radar Right Now

This isn’t speculation. In fact, it’s happening now, at a scale the industry has never seen. Yet most annuity holders have no idea their retirement income depends on it.

To understand the risk, you first need to understand how profoundly the ownership and investment philosophy of the U.S. life insurance industry has changed.

A Structural Shift—Not a Headline

Approximately one-third of the U.S. life insurance industry’s $6 trillion in assets now sits in private credit and illiquid investments—a dramatic increase from a decade ago, when these allocations made up only a small fraction of insurer portfolios. According to industry estimates and regulatory filings, private equity firms now control or influence roughly $700 billion of life insurance assets across major carriers.

The business model is straightforward: PE firms acquire or partner with insurance companies to gain access to a massive, predictable pool of capital—policyholder premiums. Then, they redeploy that capital into higher-yielding private credit investments, often originated by their own affiliated asset management platforms. As a result, the spread between what they earn on these investments and what they owe policyholders is where the profit lives.

In a stable credit environment, this model works well. But in a prolonged downturn—with rising defaults, illiquid markets, and correlated stress across private credit portfolios—what happens? Simply put, that’s the question no one has had to answer yet, because this level of private credit concentration has never existed in the insurance industry during a full credit cycle.

Which Insurance Companies Are Private Equity-Owned or Affiliated?

If you hold an annuity, the first question you should ask is: who actually owns or controls the insurance company backing my contract? After all, many policyholders don’t realize their carrier changed ownership or investment strategy years ago.

Below is a list of publicly known PE-owned, PE-affiliated, or PE-backed life insurance companies and annuity carriers operating in the United States. This information comes from public filings, press releases, and regulatory disclosures:

Why Private Credit Concentration Matters for Your Annuity

Private credit is not inherently “bad.” Indeed, many of these loans go to real businesses and are backed by real assets. However, when a life insurance company—whose primary obligation is to pay your claims and honor your guarantees—concentrates its portfolio in illiquid, hard-to-value, and hard-to-sell assets, several specific risks emerge:

1. Liquidity Risk

If a significant number of policyholders surrender annuities simultaneously (as often happens during market stress), the insurer must sell assets to meet those obligations. Unlike publicly traded bonds, private credit and structured loans cannot trade quickly or at predictable prices. There is no deep secondary market for these assets. Consequently, in a stressed environment, forced sales could mean steep losses—losses that erode the capital backing every remaining policyholder’s guarantee.

2. Valuation Opacity

Publicly traded bonds have transparent, real-time pricing. Private credit, on the other hand, does not. Insurers often value these assets using “mark-to-model” methods—meaning the insurer (or its affiliated asset manager) determines what the assets are worth based on internal assumptions rather than market transactions. As a result, regulators, rating agencies, and policyholders struggle to assess true financial health until problems are already well advanced.

3. Affiliated-Party Conflicts of Interest

In many PE-backed insurance structures, the private equity firm both owns the insurance company and manages the investment portfolio—often investing policyholder capital in loans that its own affiliated credit platform originated. This arrangement creates an inherent tension: the asset manager earns fees on deployed capital, while the insurance company bears the credit risk. Although regulators have noted these conflicts, oversight frameworks are still catching up.

Structural Risks That Go Beyond Portfolio Allocation

4. Offshore Reinsurance Structures

In addition, several PE-backed insurers use affiliated offshore reinsurance entities (domiciled in Bermuda, Cayman Islands, or other jurisdictions with lighter reserve requirements) to move liabilities off the domestic balance sheet. While legal and increasingly common, this practice reduces the regulatory capital and reserves visible to U.S. state insurance regulators—and by extension, the protection available to you as a policyholder.

5. Untested at Scale in a Downturn

Perhaps most importantly: no one has ever tested the current level of private credit concentration in the insurance industry through a full credit cycle. The 2008 financial crisis came before the PE-insurance acquisition wave. Meanwhile, the 2020 COVID shock met massive Federal Reserve intervention. As a result, we simply don’t know how concentrated private credit portfolios will perform in a prolonged recession with rising defaults, tightening credit, and illiquid markets—and neither do the carriers.

The Behavioral Trap: Why Most Annuity Holders Aren’t Paying Attention

If the risks above seem clear, you might wonder why more people aren’t talking about this. The answer lies in several well-documented behavioral finance patterns:

Status quo bias tells us that what we already own feels safe simply because we own it. For example, if your annuity has paid as expected for years, your brain interprets that track record as proof of future safety—even when the underlying portfolio has fundamentally changed.

Authority bias, meanwhile, makes us trust the brand on the contract. A well-known insurance company name creates confidence that may no longer be warranted if that company’s ownership, investment strategy, and risk profile have changed due to a PE acquisition.

Complexity avoidance is perhaps the most powerful factor. The intersection of private credit, insurance regulation, reinsurance, and state guaranty fund structures is genuinely complicated. Most people—and, frankly, most financial advisors—don’t have the tools or inclination to analyze insurer balance sheets for private credit concentration. Consequently, the risk goes unexamined.

Ultimately, the result is predictable. Millions of Americans hold annuity contracts backed by investment portfolios they’ve never seen, managed by firms they may not recognize, with risk exposures that have changed dramatically since the day they signed the application—and they don’t know it.

What You Should Do Right Now

To be clear, this is not a call to panic. The U.S. life insurance industry remains well-capitalized and profitable today, and state regulators along with the NAIC continue to strengthen oversight. However, “well-capitalized today” is not the same as “resilient in all future scenarios”—and prudent financial planning means understanding your exposure before stress arrives, not after.

With that in mind, here are the steps we recommend:

1. Identify your carrier’s ownership and affiliation. Start by reviewing the table above. If your annuity comes from a PE-owned or PE-affiliated carrier, understand that its investment portfolio likely carries a materially different risk profile than it did before the acquisition.

2. Assess your concentration. If you hold multiple annuity contracts with the same carrier—or with carriers backed by the same PE sponsor—you have concentration risk. Therefore, diversifying across carrier types (mutual, publicly traded, PE-backed) and across issuers can reduce your tail risk.

3. Check your state guaranty fund limits. Above all, make sure you know the maximum coverage in your state. If your annuity value exceeds those limits with a single carrier, you have uninsured exposure that warrants a conversation with a qualified advisor.

4. Request an independent annuity review. Your annuity carrier will not proactively tell you about the risks in its own investment portfolio. Instead, you need an independent, fiduciary perspective. A comprehensive review should evaluate the carrier’s private credit exposure, capital adequacy, reinsurance structure, and overall risk posture relative to the guarantees they’ve made to you.

5. Don’t let inertia become your strategy. The cost of reviewing your annuity is zero. The cost of discovering a problem after a credit event, on the other hand, could be your retirement income.

How Northern Pacific Asset Management Can Help

At Northern Pacific, our Sustainable Advantage® process is built around exactly this kind of proactive, independent risk analysis. While the majority of our practice is fee-based advisory, we also help clients identify and secure annuity and insurance products when their situation calls for it—and when we do, we take risks like private credit concentration, carrier financial strength, and reinsurance structure into account before making a recommendation. That’s the difference between an advisor who simply sells a product and one who evaluates the institution standing behind it.

Furthermore, we’ve published detailed Client Advisory Reports analyzing private credit concentration and counterparty risk across the insurance industry—including carrier-specific assessments for the companies where our clients hold annuity policies. These reports are available exclusively to Northern Pacific clients.

Existing Northern Pacific clients should check their email for our February 2026 Client Advisory containing both reports and carrier-specific risk tiering. Haven’t received it, or do you have questions about your specific exposure? Simply contact your Northern Pacific advisor to schedule a review.

Not yet a Northern Pacific client? We welcome the conversation. Whether your policy is with a PE-owned carrier, a traditional mutual insurer, or anywhere in between—we have the tools and expertise to evaluate your risk and help you develop a plan.