One Number, Restated
Delaware Life Insurance originally told regulators that about 3 percent of its investments, roughly $1.4 billion, were tied to entities affiliated with its owner, the investment firm of billionaire Mark Walter, who owns the Los Angeles Dodgers. After an internal review, the company corrected that figure to more than $17 billion, about 39 percent of total invested assets, according to company disclosures and reporting on the episode. The restatement was part of what drew federal investigators.
The Department of Justice and the SEC are now examining Walter's insurance empire, TWG Global and its subsidiaries, over allegations reported by the Wall Street Journal that roughly $21 billion in loans were misclassified, hiding self-dealing with affiliated entities. Delaware Life and Clear Spring Life and Annuity disclosed in June regulatory filings that they had received grand jury subpoenas. S&P Global Ratings revised Delaware Life's outlook to negative while affirming its A- rating. No charges have been filed against Walter or his companies, and Group 1001, the insurers' parent, has said its capital and liquidity remain strong.
Senator Elizabeth Warren wants the people who regulate insurance to explain what they are doing about all of it.
A Letter With a Deadline
On September 11, Warren, the ranking member of the Senate Banking Committee, wrote to Jeffrey Johnston, chief executive of the National Association of Insurance Commissioners, asking how state regulators investigate and address the risks posed by the growing ties between private investment firms and insurance companies. The NAIC must respond by September 24.
The letter is specific. Warren asked whether the NAIC is assessing whether other insurance companies have engaged in conduct similar to what investigators are examining at Walter's insurers, and whether the organization has analyzed the exposure of pension funds and state guaranty funds to private credit risk.
A NAIC spokeswoman said the organization has received the letter and looks forward to sharing how state insurance regulators actively oversee insurer exposure to private credit and other market developments to protect policyholders.
The Mechanism Everyone Is Arguing About
Life insurance runs on a long promise: premiums collected now, claims paid decades later. State law requires insurers to hold reserves sufficient to cover those claims, and the solvency regime is enforced by state examiners rather than any federal agency.
Private equity ownership changes the incentives around the reserve pool. Premiums are cheap, long-dated capital. Invest them in private credit, loans that do not trade on public markets, and reported returns can outpace the bond portfolios that historically backed policies. The risk is valuation: a private loan to an entity affiliated with the owner is not priced by any market, and when the borrower is inside the same corporate family, the transaction can move risk without moving value.
Warren's letter names the concern directly and adds a second layer: affiliated reinsurance, the practice of ceding risk to related entities, sometimes offshore, which reduces the primary insurer's exposure on paper while keeping the economics in the group. Thomas Gober, a forensic accountant who has worked on insurance failures, has spent years arguing that the practice deserves more scrutiny from state examiners.
The Industry's Answer Is Not Simply Self-Interest
The defense of private equity in insurance has substance. Private credit has delivered higher yields for insurers through a low-rate era, and life insurers, with liabilities stretching decades, are natural holders of long-dated loans. The industry argues that state regulation is risk-based rather than prescriptive, that insurers disclose their investment mix, and that the failure record of private equity owned insurers is thin.
There is also a structural point: insurance company failures are rare, and state guaranty funds have absorbed the ones that occurred. Whether that record reflects good risk management or a market that has not yet been tested by a downturn is the unresolved question.
The Two-Decade Shift Behind the Letter
Private equity's move into life insurance is one of the quietest large transformations in American finance. The model was pioneered in the 2010s by firms like Apollo, which acquired annuity writers and redirected their premium float into private credit, and it spread through the industry as low interest rates squeezed traditional bond portfolios. By Warren's accounting, life insurers' private credit holdings more than doubled from $386 billion in 2014 to $849 billion in 2024.
The business logic is real. Premiums arrive decades before claims, which makes them the longest-duration capital available outside sovereign wealth funds. Private credit pays a premium over public bonds precisely because it is illiquid, and an insurer with long liabilities is the natural buyer of illiquidity. The question regulators are now being forced to answer is where the natural buyer ends and the captive buyer begins, and what happens to valuation when the loans cannot be sold at all.
What State Regulators Have Already Done
The NAIC is not starting from zero. In 2022 it adopted regulatory considerations for private equity owned insurers, and it has since developed a new actuarial guideline on related-party asset classification, the technical fix aimed at exactly the restatement problem the Walter episode exposed. Warren's letter acknowledges these steps and calls them modest, still under development or partially implemented, which frames her real question: whether the states' tools match the speed of the ownership shift.
The guaranty fund question is the sharpest one in the letter. Every state runs a guaranty association that pays claims when an insurer fails, funded by assessments on surviving insurers. If private credit exposure produces a failure large enough to trigger those associations, the bill lands on the industry and, ultimately, on policyholders in other companies. Warren is asking whether anyone has measured the size of that contingent liability. The honest answer from the data available is that no comprehensive public analysis exists.
The Federal Shadow
The Treasury's involvement adds a layer that matters. Secretary Scott Bessent met with the NAIC earlier this year to discuss the industry's private credit exposure, which means the conversation has moved beyond state solvency regulation and into financial stability territory, where the Financial Stability Oversight Council has tools that state commissioners do not. No federal action is imminent, and insurance remains a state-regulated business, but the meeting pattern is how jurisdictions converge: a scandal, a letter, a working group, a framework.
For the industry, the strategic stakes are larger than one senator's questions. A CFPB-style federal insurance regulator has been discussed in policy circles for years, and Warren's letter supplies the argument its advocates will use: fifty state regimes, uneven resources, and ownership structures that did not exist when the system was designed. The NAIC's September 24 response will be read in that context, as the states' case for keeping the job.
Primary sources
- Warren's press release on the NAIC letter for the letter's contents, the NAIC data and the September 24 deadline.
- American Banker on the letter and the Walter investigation for the restatement figures, the Gober argument and the NAIC response.
- Insurance Business Magazine on the widening probe for the grand jury subpoenas and S&P's outlook change.