Private Equity and the Insurance Industry

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On March 16, 2016, Senator Sherrod Brown, Chairman of the Senate Banking Committee wrote to Steven Seitz, Director of the Treasury Federal Insurance Office, and Dean Cameron, President of the National Association of Insurance Commissioners (NAIC), expressing his concerns about private equity’s growing role in the insurance industry. A copy of Sen. Brown’s letter can be found here.

“I am writing to express my concern that insurance investment products workers depend on for their retirement are being transferred to these risky companies that have a track record of undermining pension and retirement programs.” 

“Investment firms like asset managers and private equity funds often take on much higher risk strategies than traditional insurance companies, and do not face all of the same capital, liquidity, and policyholder protection requirements as well-regulated insurance companies. Consequently, many workers who chose to invest their retirement savings in conservative and long-lived insurance firms now find themselves paying premiums to much riskier firms with less experience in the insurance business. While investment firms might benefit from huge profits in the short term, failure to adequately manage these risks may ultimately cost policyholders their retirement incomes.”

Senator Brown requested a report to Congress no later than May 31, 2022. We will keep you posted on further developments.