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Life insurers: retirement savings, the silent fuel of private credit

Nearly a third of the $5.6 trillion in US life insurers' assets is invested in private credit. Behind that figure, a model industrialised by Apollo and Athene: gather annuities, cede the reserves to an affiliated Bermuda reinsurer, and turn illiquid loans into privately rated bonds. A breakdown of the triangle, the 777 Re precedent, and the model's defence.

13 min read#insurance#private credit#systemic risk#bermuda#regulation#retirement
dated revision: July 16, 2026French originalprimary sourcesno tracker

An American retiree who buys a lifetime annuity believes they are entrusting their savings to one of the most prudent trades in finance. They are right about the history, less surely about the present. A growing share of these annuities is now backed by private credit loans, housed in Bermuda reinsurers controlled by the asset managers themselves, and rated by specialised agencies whose grades are not public. Each link in this chain has its own logic. It is their stacking that manufactures something new: a life-insurance balance sheet whose contents neither the saver, nor at times the home regulator, can quite see any more.

This article completes our private credit series, after the defaults and the gating, the redemptions facing the mega-IPOs and the migration of credit risk out of regulatory sight. The link treated here is the largest of all: the one that connects retirement savings to shadow credit.

A third of the balance sheet in private assets

The orders of magnitude set the scale. According to American Banker’s investigation, US life insurers have allocated nearly a third of their $5.6 trillion in assets to private credit, about $1.9 trillion of exposure. The IMF uses a similar figure in its April 2026 financial stability report: private credit accounts for about 35% of North American insurers’ portfolios. The same report highlights a divide within the sector: insurers backed by private-equity firms hold nearly twice as many illiquid assets as the others.

This shift did not happen by chance. For a private credit manager, a life insurer is the ideal partner: it brings a long, stable liability, fed by regular premiums, exactly the kind of permanent funding that traditional fundraising no longer supplies. For the insurer, private loans offer extra yield in a business whose margins have compressed. Apollo showed the way with Athene, and KKR, Ares, Brookfield and Carlyle each have their insurance vehicle. The annuity trade has become, for the giants of alternative asset management, a liability factory.

Retirement savings tilt toward private assets US life insurers' assets, in billions of dollars. Total assets ~5,600 of which private credit ~1,900, nearly a third Private-equity-backed insurers: ~2x more illiquid assets than the others (IMF). Sources: American Banker; IMF, Global Financial Stability Report (April 2026).
Nearly a third of US life insurers' balance sheets is now invested in private credit, a proportion that doubles at insurers controlled by alternative managers. Sources: American Banker, IMF.

The Bermuda triangle, insurance edition

The second stage of the structure plays out offshore. Rather than carrying the commitments in the US entity, regulated state by state, the insurer cedes its reserves to a reinsurer, very often affiliated with the same group and domiciled in Bermuda, where the prudential and accounting regime is more accommodating. This is asset-intensive reinsurance. According to Bloomberg’s investigation of the sector, US life insurers ceded $2.4 trillion of reserves in 2024, of which more than $1.1 trillion went to offshore jurisdictions, Bermuda first among them.

Athene’s case illustrates the degree of integration. According to the same investigation, 96% of its $200 billion of reinsurance came from Bermuda, and in 2024 all of its $192 billion of reinsurance support came from its own affiliate. The loop is closed: the insurer cedes its reserves to itself, under another flag, and the manager who controls the whole invests the assets in its own funds and its own loan origination. The American Academy of Actuaries devoted an entire brief to the risks of this offshore ceded reinsurance, from reinsurance leverage to concentration in affiliated assets.

The path of an annuity, in three balance sheets Saver buys an annuity US insurer regulated state by state Affiliated reinsurer Bermuda, same group premiums ceded reserves The manager's funds and loans private credit, structured reinvests the assets Reserves ceded in 2024: $2.4tn, of which more than $1.1tn offshore. Athene: 96% of its reinsurance in Bermuda, 100% affiliated in 2024. The same group controls the insurer, the reinsurer and the manager of the assets. Sources: Bloomberg (2025), American Academy of Actuaries. l0g diagram.
The annuity stays American, the reserves leave for Bermuda, the assets end up in the funds of the manager who controls the whole chain. Sources: Bloomberg, American Academy of Actuaries. l0g diagram.

The private rating, key to regulatory capital

There remains the task of fitting illiquid loans into a regulated balance sheet. The tool is called the rated feeder note: a feeder vehicle invests in the private credit fund and issues debt securities carrying a rating, most often a private one, disclosed only to the subscriber. As Troutman Pepper explains, holding a rated note rather than an unrated fund interest reduces the capital the insurer must set aside. The economic exposure is the same; its regulatory cost is not.

The rise of these private ratings is spectacular. The IMF, cited by Institutional Investor, notes that about 7,000 securities were rated by specialised agencies in 2023, against 2,000 in 2019, a near-quadrupling. And the quality of these grades raises questions: according to the research relayed by Alternative Credit Investor, when a security leaves the in-house assessment of the NAIC’s securities valuation office for a private rating, it is upgraded more than four times as often as it is downgraded; the same move to a public rating produces as many upgrades as downgrades. The choice of rating channel then looks less like a measure of risk than an optimisation of capital.

Regulators have begun to react. The NAIC adopted rules, applicable in 2026, that allow it to override ratings deemed too favourable and impose heavier capital charges. Capstone reports that the US Treasury itself is engaging with state regulators on the stability of this market, a sign that the subject has left the circle of specialists.

The private rating, a booming industry Securities rated by specialised agencies, and direction of revisions by channel. 2019 ~2,000 securities 2023 ~7,000 securities Move to a private rating: 4x more upgrades than downgrades Move to a public rating: upgrades and downgrades balanced Since 2026, the NAIC can override ratings deemed too favourable. Sources: IMF via Institutional Investor; Alternative Credit Investor; Troutman Pepper.
The volume of privately rated securities nearly quadrupled in four years, and the private channel produces systematically more favourable grades. Sources: IMF, Alternative Credit Investor.

777 Re, the dress rehearsal

What can go wrong is no longer a hypothesis: it has a name. 777 Re, the Bermuda reinsurer of the 777 Partners group, had accumulated on its balance sheet affiliated assets, invested in its shareholder’s own businesses, from a football club to an airline. On 8 October 2024, the Bermuda Monetary Authority cancelled its registration, having found an excess of affiliated assets, deficient governance and insufficient capital contributions. Upstream in the chain, the American insurer A-CAP, which had ceded $1.7 billion of reserves to 777 Re according to the regulators’ petition relayed by the Retirement Income Journal, saw its rating cut by AM Best in February 2024, the agency citing high reinsurance leverage and the deteriorating quality of its counterparties.

The episode stayed contained, and that is good news. But it validates the contagion pattern in miniature: American annuities, an affiliated Bermuda reinsurer, illiquid assets tied to the shareholder, and a state regulator discovering the problem from the end of the chain. The difference between 777 Re and the sector’s large players is one of scale and asset quality, not of structure.

The long liability, the model’s defence

The argument of the model’s defenders deserves to be stated at full strength, because it is serious. An annuity is not a bank deposit: the liability is long, predictable, and early surrenders are curbed by contractual and tax penalties. A holder of twenty-year commitments is precisely the actor best placed to carry illiquid assets, far better than a semi-liquid fund open to quarterly redemptions, whose repeated gating we have documented. Asset-liability matching is the heart of the insurance trade; private credit can find a legitimate place in it.

The data is, moreover, partly reassuring. The liquidity ratios of Bermuda life reinsurers comfortably exceed the regulatory minimums, according to the regulator’s figures relayed by the trade press, and the Bermuda Monetary Authority has tightened its review of asset strategies. The IMF itself, in its April 2026 press briefing, judges the exposure of insurers and pension funds to private credit “fairly manageable to date”, while calling on supervisors to keep watching it closely.

The reservation holds in three points. First, the liability is long only as long as surrenders remain discouraged: a sharp rise in rates, which makes old annuities uncompetitive, can accelerate exits at the precise moment illiquid assets are hardest to sell, the run scenario the IMF described as early as its work on private equity and life insurers. Next, the model-based valuation of private assets makes the balance sheet hard to challenge from the outside, the opacity problem at the centre of the silent contagion we have been documenting for months. Finally, generalised affiliation, where the same group originates the loans, manages the funds, controls the insurer and the reinsurer, concentrates the conflicts of interest that 777 Re’s structure displayed on a small scale.

The signals to watch

Five indicators will say whether this structure ages well. The pace of reserve cessions to Bermuda, first, which the American Academy of Actuaries and the NAIC now track closely. The share of affiliated assets on reinsurers’ balance sheets, the criterion that brought down 777 Re. The effective enforcement of the NAIC’s new rules on private ratings, and the number of grades overridden. The surrender rate on annuities in a rate move, the only real test of the long liability. And the transparency of Bermuda’s regulators, whose credibility has become a component of America’s financial-stability apparatus.

Life insurance has always invested long savings in long-term assets; that is its function. The novelty is not there. It lies in the concentration of roles in the hands of the same groups, the shifting of reserves toward more accommodating jurisdictions, and ratings whose discretion suits everyone except the person who, at the end of the chain, collects the annuity. The risk has not left the system: it has settled where the saver never thinks to look for it, on the balance sheet of their own insurer.

Sources

This article is journalistic analysis and does not constitute investment advice. Data is cited as of the date of its sources.

This analysis is not investment advice.

// cite this analysis

l0g, “Life insurers: retirement savings, the silent fuel of private credit”, l0g.fr, published July 16, 2026, updated July 16, 2026, https://l0g.fr/en/analysis/life-insurers-retirement-savings-private-credit-bermuda/

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