The growing role of private equity in the life insurance sector has potentially significant economic and financial implications. In a new insight, Policy Fellow Oren Swagel examines why policymakers should remain aware of developments in the life insurance market, where total assets stand at one-third of U.S. gross domestic product.

Key points:

• Private equity (PE) firms have taken an increasingly large share of the life insurance market, with 139 PE-owned life insurers collectively managing about 8 percent of U.S. life insurance assets, roughly $700 billion, as of 2024, up from about $1 billion in 2010.
• This growth has been driven by opportunities for PE firms to profit from owning life insurers and by the period of low interest rates that followed the 2008 financial crisis, which reduced traditional life insurers’ profits, incentivized them to wind down less profitable business lines, and spurred them to increase investment in alternative assets with the potential for higher returns.
• Although the rise in PE-owned life insurers may offer economic benefits, such as more affordable policies and cheaper corporate financing, these insurers’ increased investments in more opaque alternative assets and use of complex offshore reinsurance could create new channels through which risk might propagate across the financial system.

Read the analysis.