The world is waking up to the fact that insurance company investments may join pension plans in not being able to fulfill their commitments to beneficiaries. In November 2023 PEUReport wrote:
Several years ago private equity firms began buying insurance companies and steering those pools of capital to their PEU offerings. This was framed as smart capitalism vs. a conflict of interest.The world saw this with Mark Walter's using captive insurance companies to finance his private equity holdings. The more investigators dig, the more they find. $17 billion in undisclosed loans becomes $21 billion.
Apollo founded Athene in the aftermath of the financial crisis, later taking it over completely in 2021.
Carlyle bought their initial stake in Fortitude Re in 2018 and later acquired a majority stake with T&D Holdings (a Tokyo based insurer). Many private equity underwriters (PEU) bought insurance companies in their search for permanent capital.
Forensic accountant Tom Gober outlined the risks associated with strategies undertaken by PEU owned insurers in The Institutional Risk Analyst. Investing legend George Noble had Gober on his podcast recently.
Retirement Income Journal reported on Gober's House testimony in July 2023.
Gober, in his presentation, focused on the conflicts of interest inherent in certain life/annuity companies’ purchase of assets from sibling firms in the same holding company (“affiliated assets”). As for offshore reinsurance, he called it a “sleight of hand” tactic for reducing the amount of surplus capital supporting pension liabilities.The warning is relative to current insurance company investments and how they are valued. Things can get worse if insurance companies answer BlackRock CEO Larry Fink's call to finance data centers.
Law firm Quinn Emanuel’s March memo on data-center debt was making the rounds in recent days, laying out worst-case scenarios for the hundreds of billions of dollars being borrowed and spent to fund the AI buildout. It does the one thing professional-services memos never do: It names names.Their report states:
The scale and complexity of the financing structures underpinning the AI data center buildout are already raising concerns among regulators, investors, and policymakers. For example, in January 2026, four U.S. Senators urged in an open letter that regulators investigate the AI sector’s growing reliance on debt. The letter warned that companies are increasingly turning toward “complex and opaque debt markets to borrow staggering sums of cash” and their inability to service the debt “could cause destabilizing losses for an interconnected set of financial institutions, triggering a broader financial crisis that harms the economy.” The Federal Reserve and the Bank for International Settlements have expressed similar concerns.My wise friend noted:
When these data centers announce they are borrowing money in the trillions and the whole group and everything related goes up 10X, you would expect an equal retreat when Open AI basically fudges their numbers by $28 billion.
It's all funny games when it's other people's money. No one gives a hoot under big number = big fee. If it all collapses, don't blame me. I just package and sell "investments."
Congrees heard about this three years ago and nothing has been done? That's because politicians Red & Blue love PEU and their new TechGod brethren. Increasingly, more are one.
