Fred Reish and Chris Heye identify a real retirement problem in their Summer 2026 Journal of Pension Benefits article, “The Importance of Annuities for Retired Workers: Why 401(k) Plans Should Include Guaranteed Income.” Retirees need dependable income, and managing investments and withdrawals can become harder with age.
But identifying a problem does not establish that the insurance industry’s preferred solution is the best answer. The article explains the risks of managing retirement savings far more fully than the risks of handing those savings to an insurance company.
Its omissions matter because a product that simplifies monthly cash flow can simultaneously introduce insurer credit risk, opaque pricing, contractual restrictions, and conflicts of interest.
“Guaranteed” by whom?
A general-account annuity replaces some investment and longevity risks with a contractual promise from an insurer. The policyholder owns contractual rights, rather than direct ownership of the insurer’s underlying investment portfolio.
The insurer may hold thousands of investments. That does not mean the retiree has thousands of independently enforceable promises. The retiree’s claim remains against the issuing company.
Other annuity structures can hold assets in separate accounts or diversify guarantees among insurers. Those differences deserve analysis. Treating “annuities” as a single solution conceals precisely the distinctions a fiduciary needs to understand.
The article gives no meaningful examination of what happens if the insurer weakens, what backs the promise, or what protection the participant actually has.
Cognitive decline strengthens the case for safeguards
Reish and Heye devote considerable attention to cognitive decline. Their concern is legitimate. Their policy conclusion is incomplete.
Someone who may struggle to rebalance a portfolio may also struggle to evaluate an annuity contract, compare payout options, recognize a deteriorating insurer, or understand what happens after a rollover.
The answer cannot be merely to educate participants about the advantages of annuities. Education must explain the disadvantages with equal clarity.
A monthly payment can simplify budgeting. It does not prevent a scammer from stealing money after it reaches the retiree’s bank account. Nor does it establish that a complex insurance purchase was suitable in the first place.
If diminished capacity justifies stronger intervention by plan fiduciaries, it also justifies stronger protections against inappropriate insurance products.
Where is the downgrade clause?
The article recommends commitments that can last for decades without discussing a basic contractual protection: what happens when the insurer no longer meets the financial-strength standard that justified its selection?
If a committee selected an insurer because it was AA-rated, what remedy does the participant have after serious deterioration?
That is a proposed protection, not a universal requirement of current law. It would need to be negotiated, priced, and funded. Replacing an already-annuitized payment obligation is more difficult than moving an investment account, and a promise to find a replacement insurer is not enough.
A workable contract must identify the trigger, the replacement mechanism, who bears the cost, and what happens when several insurers weaken together.
Those difficulties are reasons to address the issue before purchase. They are not reasons to omit it.
The costs do not disappear because there is no expense ratio
The article provides no meaningful account of annuity pricing.
Depending on the product, compensation can appear through explicit charges, commissions, embedded spreads, guarantee fees, or the terms of the payout itself. An apparently fee-free contract may still be expensive.
An insurer’s entire investment spread is not pure profit or a mutual-fund-style expense ratio. It also funds insurance risks, capital, administration, and other costs. But that is an argument for explaining the economics, not leaving them invisible.
Fiduciaries should demand competing quotes on comparable terms: the same premium, age, commencement date, survivor protection, refund features, inflation treatment, and credit quality. A payout percentage is not an investment return; it can include repayment of the participant’s own principal.
The safe-harbor discussion leaves out a crucial statutory requirement
The article describes the SECURE Act insurer-selection safe harbor as obtaining specified insurer information for fiduciary protection, then associates cost review with the separate regulatory safe harbor.
That presentation is materially incomplete.
[ERISA section 404(e)(1)(B)(ii) and (C)(ii)](https://www.law.cornell.edu/uscode/text/29/1104) also require consideration of contract costs, including fees and commissions, and a conclusion that the relative cost is reasonable in relation to the benefits and services. Insurer representations address specified financial-capability considerations; they do not replace the entire selection process.
More fundamentally, protection for a selecting fiduciary does not supply additional capital to the insurer or improve a retiree’s contractual recovery after failure.
A safe harbor for the buyer is not a guarantee for the beneficiary.
Outsourcing selection does not eliminate oversight
The article also points to DOL Advisory Opinion 2025-04A as a way to shift annuity-selection responsibility to an investment manager.
The opinion also describes features that deserve more attention: multiple insurers, quarterly competitive bidding, and continuing insurer review. These are representations about the particular program, not DOL factual findings or a blanket endorsement of annuities.
If fiduciary expertise is outsourced, the committee still needs to understand the manager’s incentives, methods, compensation, and conflicts.
Where are the prohibited-transaction questions?
The article does not examine whether an insurer, recordkeeper, adviser, or affiliate is a party in interest, or how compensation moves among them.
An insurer recordkeeper recommending its own annuity presents a different conflict from an independent adviser evaluating competing providers. Proprietary products, affiliated services, commissions, and platform payments deserve scrutiny.
Not every annuity purchase is automatically unlawful. But an insurer-selection safe harbor is not itself a prohibited-transaction exemption. Fiduciaries should identify the exemption they rely on and document compliance with its conditions.
State regulation is part of the product
A decades-long insurance promise cannot be evaluated without examining the system supervising it.
Which legal entity issued the contract? Where is it domiciled? How much risk has been reinsured, to whom, and under which jurisdiction? What affiliated investments, private-credit exposures, or valuation assumptions support the promise?
A higher quoted benefit does not establish superior value if the difference reflects additional risk or weaker protection. Conversely, domicile alone does not prove a particular insurer is unsafe. The committee needs evidence.
State guaranty-association protection also requires contract-specific analysis. Coverage depends on governing law and eligibility rules; it should never be presented as an unlimited federal backstop.
A regular payment is not necessarily an adequate payment
The article invokes healthcare and long-term-care expenses without adequately examining inflation or emergency liquidity.
At 3% annual inflation, a fixed payment loses approximately 45% of its purchasing power over 20 years. An income check that continues for life can still become inadequate.
An annuity can help pay care bills. It does not, simply by producing income, insure the cost of long-term care. An unexpected large expense may require liquid assets precisely when an annuitized premium is unavailable.
Fiduciaries must also examine survivor benefits, early-death outcomes, portability, and any loss of guarantees when participants change employers or move their accounts.
Compare alternatives before declaring the solution
The article moves too quickly from the need for retirement income to the need for annuities.
Automatic withdrawals, diversified low-cost portfolios, bond or TIPS ladders, and strategies that coordinate withdrawals with Social Security deserve comparison. These alternatives do not all insure against extreme longevity. Annuities do not solve every liquidity, inflation, or credit problem either.
Reish and Heye make a persuasive case that retirees need help. Their article does not establish that the annuity products offered to them provide that help at a reasonable cost, with adequate transparency and enforceable protections.
Before a fiduciary asks an aging participant to trust a lifetime guarantee, the fiduciary should be able to explain who stands behind it, what it costs, what can go wrong, and what the participant can do when the promise weakens.
BlackRock’s new survey of insurers representing more than $24 trillion in assets shows that 76% plan to increase private-market investments. Coming one week after Wharton’s alarming research on private-equity-owned insurers, the findings raise a bigger question: Who is measuring the risks being transferred to America’s annuity holders and pensioners?
Chris Tobe, CFA, CAIA The CommonSense 401k Project | October 27, 2026
BlackRock Just Confirmed What Wharton Warned About
Last week, I wrote about an important new Wharton research paper documenting how private-equity-owned insurance companies were increasing risks through affiliated investments, private credit, and structured securities.
Insurers using internal and external asset management
84%
Insurers planning greater use of external asset managers
49%
Insurers reporting external partnerships across two or more business functions
82%
Source: BlackRock, 2026 Global Insurance Survey, released October 27, 2026.
These are survey responses, not independently verified portfolio-level risk measurements. They do not establish that 76% of insurers are taking imprudent risks.
But they show that private markets have moved from a specialized investment strategy to a mainstream component of insurance balance sheets.
Private equity no longer needs to own an insurance company to influence how that insurer invests its policyholders’ money.
That should concern everyone depending on fixed annuities, pension risk transfer annuities, or other long-term insurance guarantees.
The Most Disturbing Finding: 76% Want More Private Markets, but 82% Say They Are Not Increasing Risk
BlackRock reports that 82% of insurers plan to maintain their overall investment-risk profile.
At the same time, 76% plan to increase their private-market allocations.
How can both be true?
There are legitimate explanations. An insurer might reduce other exposures, diversify its investments, or purchase private assets with genuinely strong credit protection.
But the apparent contradiction also exposes a major problem with insurance risk measurement.
Private credit can appear less volatile than publicly traded bonds because it is not priced continuously in an active market.
A publicly traded corporate bond may decline sharply in market value when credit spreads widen.
A privately originated loan may continue to appear on an insurer’s books at or near its adjusted carrying value, even when selling it would require a substantial discount.
The absence of a daily market price does not eliminate the economic loss.
It may simply delay its recognition.
When you stop measuring market volatility, you have not eliminated risk. You may have eliminated the evidence of risk.
That is especially dangerous when insurers use historical volatility, accounting valuations, or favorable private ratings to justify increased allocations to illiquid investments.
The BlackRock survey does not prove that insurers are understating risk. But it makes independent verification more important.
Wharton Found the Hidden Risk. BlackRock Shows How Broadly Private Markets Have Spread.
The two studies should be read together.
The September 2026 Wharton paper, Buying from the Family: Private Equity-Owned Insurers and Their Affiliated Investments, by Amy W. Huber, Stefan Huber, Bella Shan, and Christina Zhu, examined how private-equity-owned insurers invest in securities issued by affiliated businesses.
The researchers found that PE-owned insurers were more likely to purchase affiliated structured securities, sometimes paid higher prices for them, and were less inclined to recognize impairment or sell deteriorating affiliated investments.
Their analysis of NAIC stress-test results was especially alarming.
Under a severe scenario broadly comparable to the 2008 financial crisis, the researchers estimated that affiliated structured-credit exposure could generate approximately four additional percentage points of losses across PE-owned insurers’ fixed-income portfolios.
That compares with an average equity buffer of 7.6% of fixed-income investments.
In other words, the additional modeled losses alone could consume more than half that measured buffer.
The calculation involves extrapolating stress-test results from broadly syndicated CLOs to other structured securities, so it is an estimate rather than a prediction of insurer insolvency.
Nevertheless, it demonstrates why the apparent stability of private-credit investments during normal conditions may be misleading.
BlackRock now supplies the broader industry context.
Its survey shows that private markets are no longer confined to insurers controlled by private-equity firms.
Traditional insurers increasingly invest through external asset managers, separate accounts, and customized mandates.
The risk identified by Wharton is not necessarily identical across these arrangements. An independent insurer hiring a private-credit manager does not automatically have the same conflicts as an insurer buying securities from an affiliated issuer.
But the expansion raises common questions about valuation, liquidity, capital requirements, and who ultimately controls investment decisions.
Wharton documented a specific mechanism of risk. BlackRock demonstrates the enormous scale of the industry’s movement into private assets.
Together, they make a compelling case for federal scrutiny.
The Insurance Industry Is Becoming a Private-Credit Financing Machine
BlackRock reports that 84% of surveyed insurers use a hybrid investment-management model, combining internal capabilities with outside managers.
Nearly half expect to increase their reliance on external asset management.
Even more revealing, 82% report external partnerships covering at least two business functions, including investments, capital, liability and product design, or distribution.
BlackRock describes this evolution as a more modular insurance industry.
That sounds efficient.
But from a regulatory perspective, it raises an important question:
When an insurer depends on a network of outside asset managers, reinsurers, investment originators, and affiliated financial entities, who is responsible for evaluating the risks of the entire arrangement?
Consider a hypothetical insurer that purchases private-credit securities originated by an outside asset manager.
The securities are privately rated.
The underlying loans are held through investment vehicles.
The insurer reports the investments at statutory carrying values.
The asset manager earns fees for originating and managing the loans.
The insurer receives the yield, assumes the investment risk, and promises to pay annuity holders for decades.
This arrangement may be perfectly legitimate.
But it can also create conflicts when the asset manager benefits from placing loans with an insurer regardless of whether those loans represent the best available investments for policyholders.
The potential conflicts become more serious when ownership, financing, reinsurance, or other business relationships connect the participants.
Wharton’s findings show why affiliated transactions deserve special scrutiny.
BlackRock’s findings show why regulators also need to examine the increasingly complex relationships between nominally independent insurers and their investment partners.
A 15-Year Private Mortgage Does Not Become Safe Because Its Interest Rate Resets Every Three Months
One of the biggest weaknesses in insurance asset/liability analysis is the distinction between interest-rate duration and actual liquidity.
Consider a private commercial mortgage with a 15-year maturity and an interest rate that resets quarterly.
Its sensitivity to changes in benchmark interest rates may be relatively low.
But its principal remains exposed to the borrower for 15 years unless it is prepaid or refinanced.
If commercial real estate values decline, the borrower encounters financial difficulty, or refinancing becomes unavailable, the insurer may face a substantial loss.
And if the insurer needs cash immediately, selling the mortgage may require a large discount.
A three-month rate reset does not produce a three-month investment.
It does not guarantee repayment of principal.
It does not guarantee market liquidity.
It does not eliminate credit-spread risk.
Yet insurers can present portfolios with relatively short interest-rate duration and favorable credit ratings without providing enough information about the underlying contractual maturities and stressed liquidation values.
This is especially important for general-account fixed annuities.
A retirement plan may hold an institutional fixed annuity for 20 or 30 years without a fixed contractual maturity date.
The insurer may model the expected liability duration at a substantially shorter period based on participant withdrawals and expected plan behavior.
Meanwhile, the supporting assets may include privately originated loans with contractual maturities extending well beyond their apparent interest-rate duration.
The question is not simply whether the insurer’s reported asset duration matches its modeled liability duration.
The question is whether the insurer can produce cash when it needs to pay policyholders during a severe credit crisis.
That requires an entirely different level of disclosure.
BlackRock’s Own Business Interests Deserve Scrutiny
BlackRock is not a neutral academic observer.
It is one of the world’s largest asset managers and an increasingly important participant in private markets, including through its acquisition of HPS Investment Partners.
It has a commercial interest in providing investment-management services to insurance companies.
That does not invalidate its survey. The findings are valuable precisely because they reflect what insurance executives say they intend to do.
But it should affect how regulators interpret the industry’s enthusiasm for private markets.
Asset managers benefit when insurers allocate more capital to investment products and mandates they manage.
Insurers may benefit from higher expected yields.
Insurance executives may benefit from improved reported profitability and competitiveness.
The annuity holder, however, does not necessarily receive a proportional share of those benefits.
In a traditional general-account fixed annuity, the insurer typically retains the difference between its investment earnings and the crediting rate promised to policyholders, after expenses and other costs.
When investment yields increase, the insurer may retain some or much of the additional spread.
But if those higher yields reflect greater credit, liquidity, or valuation risk, policyholders remain exposed to the insurer’s ability to honor its guarantees.
This creates an obvious question:
Are insurance companies increasing private-credit exposure to improve retirement security, or to increase the investment spread retained by insurers and their financial partners?
That question deserves far more scrutiny than it receives.
The Race to the Bottom May Already Be Underway
My Wharton based article argued that private-equity-owned insurers could create competitive pressure on traditional insurance companies.
The logic is straightforward.
If one insurer can offer attractive annuity rates or lower pension risk transfer premiums because it invests in higher-yielding private credit, competing insurers may face pressure to increase their own portfolio yields.
They can accept lower profits, lose business, or pursue similar investments.
BlackRock’s survey suggests that private-market investing is now widely embedded in insurers’ strategies.
It does not prove that competition has forced every insurer to take more risk.
But it supports the concern that the industry is moving in a common direction, even while individual insurers differ in their investment policies.
This matters enormously for pension risk transfers.
A pension sponsor shopping for an annuity may prefer the insurer offering the lowest premium.
A lower premium can leave more assets available for the sponsor or reduce the cost of terminating the pension obligation.
But if the lower price is made possible by assuming greater private-credit risk, pensioners may bear consequences that are not reflected in the initial transaction price.
Under a pension risk transfer, retirees typically lose the protection of the PBGC for transferred benefits and instead depend on the insurer’s contractual promise and applicable state guaranty protections.
That makes the insurer’s investment portfolio a critical component of retirement security.
A fiduciary cannot adequately evaluate that promise merely by reviewing a financial-strength rating.
The insurer’s private-credit concentration, asset-manager relationships, liquidity, and stress-test results are equally relevant.
Remember AIG: Ratings Do Not Prevent Liquidity Crises
The insurance industry has been here before.
AIG held an AAA credit rating in early 2005.
By September 2008, following successive downgrades, it was rated A− and required an emergency $85 billion Federal Reserve rescue.
AIG’s problems included mortgage-related securities, derivatives collateral requirements, securities lending, and the inability to raise cash when confidence disappeared.
The crisis did not require every regulated insurance subsidiary to become legally insolvent.
Liquidity demands at the broader financial group became overwhelming before a formal bankruptcy.
The comparison with today’s private-credit insurers is not exact.
AIG’s derivatives and securities-lending exposures differed from the private-credit investments highlighted by Wharton and BlackRock.
But the underlying lesson remains important.
A highly rated financial institution can become a systemic threat when deteriorating assets, leverage, credit downgrades, and liquidity demands reinforce one another.
BlackRock reports that 61% of surveyed insurers expect a soft landing for the global economy over the next year.
Only 18% identify recession as a leading macroeconomic concern, down from 35% in 2025.
That optimism may prove justified.
But retirement security should not depend on the majority of insurance executives correctly forecasting the next recession.
The entire purpose of capital requirements and insurance regulation is to ensure that promises survive when optimistic assumptions prove wrong.
A general-account fixed annuity exposes participants to the financial strength of one insurer.
The insurer may own thousands of investments, but the participant generally owns a contractual claim against that insurer rather than a diversified interest in the underlying assets.
One protection is an enforceable downgrade clause permitting the retirement plan to exit at book value if the insurer’s financial strength deteriorates.
Insurers may resist such provisions because they create liquidity obligations at precisely the time the insurer could be under financial stress.
That resistance demonstrates why the provisions can be valuable.
But downgrade clauses must be supported by appropriate capital and liquidity requirements. A contractual promise is only useful if the insurer can honor it.
For PRT annuities, comparable protection could involve additional collateral, security arrangements, or replacement-insurer mechanisms rather than simply allowing pensioners to surrender lifetime benefits.
Congress should require fiduciaries to evaluate these protections through competitive bidding and require insurers to disclose their cost.
The value of protection should not be ignored merely because insurers prefer contracts without it.
The NAIC Cannot Regulate This Problem Adequately by Itself
The United States continues to rely primarily on state insurance regulation, coordinated through the National Association of Insurance Commissioners.
The NAIC develops important model laws, valuation rules, and risk-based capital standards.
But it is not a federal regulator with direct nationwide enforcement authority over every insurance company and financial conglomerate.
Meanwhile, the investments supporting American annuities can pass through asset managers, reinsurers, offshore entities, and privately structured investment vehicles operating across multiple jurisdictions.
The financial risks are national and increasingly global.
BlackRock’s survey makes that argument more urgent.
If insurers representing trillions of dollars are increasingly dependent on private markets and external financial partners, regulators need the authority to examine those relationships across the entire corporate structure.
They need to know who originated the investments, who rated them, who values them, who receives the fees, where the assets are legally held, and what happens when the insurer needs cash.
And they need to be able to intervene before a financial crisis exposes risks that statutory accounting failed to reveal.
Congress Should Require Seven Reforms
1. Full disclosure of private-credit investments. Insurers should report private-credit exposures by asset class, contractual maturity, interest-rate duration, credit-spread sensitivity, valuation methodology, rating provider, and liquidity.
2. Independent valuation and rating scrutiny. Privately rated securities and affiliated investments should face independent review, particularly when their favorable ratings reduce statutory capital requirements.
3. Federal insurance liquidity stress tests. Regulators should test simultaneous private-credit defaults, declining recovery rates, credit-spread widening, downgrades, and forced asset sales. The tests should examine both capital adequacy and actual cash availability.
4. Transparency across affiliated and external investment managers. Insurers should disclose ownership relationships, investment-management fees, affiliated transactions, reinsurance arrangements, and material conflicts of interest.
5. Offshore investment transparency. Federal reporting should trace retirement assets through Bermuda, Cayman, Luxembourg, Delaware, and other investment structures to their ultimate economic exposures.
6. Stronger retirement-annuity protections. ERISA fiduciaries should obtain meaningful information about insurer credit and liquidity risk, and evaluate downgrade provisions or equivalent security protections before committing participant benefits to an insurer.
7. A federal insurance regulator with real authority. Congress should establish a federal agency capable of supervising systemic insurance risks, requiring standardized disclosures, examining financial groups, and enforcing capital and liquidity standards across state and international boundaries.
These reforms would not prohibit prudent private-credit investing.
They would require insurers to demonstrate that their assets, capital, and liquidity are adequate to support the promises they have made.
That should not be controversial.
The BlackRock Warning Is Bigger Than BlackRock Intended
BlackRock presents its survey as evidence that private markets have become a mature and strategic component of insurance investment portfolios.
That may be how the asset-management industry sees it.
I see something more troubling.
Wharton has documented how affiliated private-credit investing can weaken investment discipline and magnify losses under severe stress.
BlackRock now confirms that private-market exposure is widespread and that insurers are increasingly relying on external financial partners to manage their assets and businesses.
Together, these findings suggest that the risks associated with private credit can no longer be treated as a specialized problem involving a few private-equity-owned insurance companies.
The issue is potentially much larger.
The entire insurance industry is becoming more connected to private-credit markets, asset managers, and complex financial structures.
And the people who ultimately depend on insurance promises—retirees, pensioners, and annuity holders—may have little understanding of those risks.
The industry’s response will be that the investments are diversified, investment grade, professionally managed, and appropriately capitalized.
Those assurances are not enough.
A privately rated AA security is not the same as cash.
A floating-rate 15-year mortgage is not a short-term liquid investment.
An investment carried at book value is not necessarily worth that amount in a distressed sale.
And an insurance company with adequate reported statutory capital is not necessarily prepared for simultaneous credit losses and liquidity demands.
BlackRock reports that 74% of respondents plan to access private debt through separate accounts or bespoke mandates. That reinforces the need for asset-level transparency and scrutiny of insurer–asset-manager relationships, even when the insurer is not PE-owned.
BlackRock has confirmed the scale of the industry’s private-market expansion. Wharton has demonstrated some of the hidden dangers. AIG demonstrated what can happen when financial risks and liquidity demands overwhelm even a highly rated institution.
Congress should connect the dots.
America needs federal insurance regulation before the next private-credit crisis—not another taxpayer rescue afterward.
My wife and I are parents of an autistic daughter. Medicaid waiver services are an essential part of how we meet her needs and plan for her future.
When Washington debates Medicaid, we hear something more concrete than competing budget numbers. We hear questions about whether families can find caregivers, whether community services will remain available, and whether adults who need substantial support will have somewhere safe to live when their parents can no longer care for them.
Kentucky’s Senate candidates, Andy Barr and Charles Booker, should be judged on how their policies answer those questions.
The record shows a clear difference. On July 3, 2025, Barr voted for final House passage of the One Big Beautiful Bill Act, which President Trump signed the following day. Booker’s campaign explicitly calls for reversing the law’s Medicaid cuts. One candidate helped enact the changes; the other promises to reverse them.
Voters deserve to understand what that difference means.
KFF reports that the Congressional Budget Office estimated the legislation would reduce federal Medicaid spending by approximately $911 billion over 2025–2034 compared with the previous legal baseline. This is a substantial withdrawal of federal support relative to what otherwise would have been provided.
Barr has defended the legislation as protecting Medicaid against fraud, waste, and abuse. He has also argued that Medicaid spending will continue growing over the next decade.
Spending can rise in dollars while falling substantially below the amount projected under prior law. Population needs, medical costs, and caregiver wages do not stop increasing because Congress changes a funding formula. A growing national spending total does not establish that Kentucky will have sufficient resources to sustain access to care.
The relevant question is whether people can actually obtain the services they need.
That matters especially for home and community-based services. Most of these services are optional under federal Medicaid law, and states can limit waiver enrollment and spending. KFF warns that federal funding reductions could lead states to serve fewer people, reduce benefits, or lower provider payments.
“Optional” is a budget classification. For a family depending on personal care, respite, behavioral support, or residential assistance, these services can be indispensable.
Nor does an exemption from work requirements settle the issue. Kentucky says the requirements beginning January 1, 2027, apply principally to Medicaid expansion adults, with exemptions including people with disabilities and qualifying caregivers. Those protections matter. They do not guarantee adequate funding for waiver services or an available caregiver.
Kentucky has already demonstrated how fragile this system can be. In July, Governor Andy Beshear announced that unexpected revenue would prevent a planned 4% Medicaid provider fee schedule reduction and address underfunding of existing Michelle P. waiver slots. That was a separate state budget dispute, and it should be described accurately. It also showed that maintaining services requires actual money and deliberate policy choices.
Booker’s commitment to reverse the federal Medicaid cuts addresses that funding problem more directly than assurances that the program remains protected.
Kentucky’s next senator must also recognize the connection between family caregiving and the broader economy. When reliable support disappears, someone must fill the gap. Often that means a parent reducing work, leaving employment, or postponing retirement. The need remains even when public funding retreats.
For my family, planning for our daughter’s future requires services we can depend on over many years. Kentucky deserves a senator prepared to make that same long-term commitment—and willing to be held accountable for delivering it. Charles Booker is that Senator.
Massie deserves credit for challenging his own party’s leadership and helping force disclosure of the Epstein files. His defeat should never become permission for Washington to abandon the investigation or protect powerful people from scrutiny.
Melissa Strange has made her position explicit. Her campaign platform calls for releasing the Epstein files and prosecuting perpetrators. She also supports restrictions on congressional stock trading, a ban on members becoming lobbyists, and campaign finance reform. These are public commitments voters can use to hold her accountable.
Her Republican opponent, Ed Gallrein, benefited from an outside spending operation that has strong connections to Jeffrey Epstein and Israel.
In the primary Gallrein received from Paul Singer via MAGA KY $3 million. Singer is a major pro-Israel financier who helped fund the operation against Massie, and he is mentioned in Epstein records. His oil company CITGO was a major beneficiary of the Venezuela operation.
Miriam Adelson a joint citizen of US and Israel gave $750,000 to MAGA KY. Both Miriam and her late husband Sheldon Adelson are mentioned in Epstein-related materials.
Hedge Funder John Paulson was a major $410,000 Gallrein doner in primary. Massie publicly challenged Paulson’s appearance in Epstein’s address book, and subsequently released records that show Epstein emailed Paulson about a $50,000 donation to a dinner honoring Howard Lutnick.
Trump Secretary of Commerce Howard Lutnick contributed approximately $8.75 million to MAGA Inc. during the 2024 cycle. ABC News subsequently reported his acknowledgment of a 2012 visit to Epstein’s island, years after the point at which he had previously said he would never again be in Epstein’s presence.
Ronald Lauder gave MAGA Inc. $5 million, according to Forbes’ review of federal filings. Bloomberg reported that Epstein coordinated a legal entity allowing Lauder and Apollo co-founder Leon Black to share ownership of a $25 million painting. That was a specific financial arrangement involving Epstein.
Schwarzman, Blackstone’s co-founder, contributed $400,000 appears in the Epstein records.
The survivors deserve an accounting of who enabled Epstein, how institutions failed them, and why accountability took so long. Kentuckians deserve a representative prepared to demand those answers even when influential people would prefer silence.
Melissa Strange has committed herself to Epstein disclosure and accountability. On that basis, she has my endorsement for Congress.
Chris Tobe is the Chair of Kentucky Epstein Justice
Ohio needs an attorney general willing to investigate the financial establishment that has grown comfortable operating behind pension secrecy, political connections and public subsidies. That is why I support John Kulewicz over Keith Faber.
Kulewicz offers an opportunity to change direction. Faber’s record as auditor gives me little confidence that he would deliver the independent scrutiny Ohio teachers, retirees and taxpayers deserve. Faber has taken large amounts of money from Epstein and data center-related donors.
The next attorney general should bring transparency to three overlapping subjects: public-pension investments, financial relationships involving Jeffrey Epstein’s wealthy associates, and the money behind Ohio’s data-center boom. Each involves powerful interests. Each requires someone willing to follow public money wherever the records lead. The AG plays a major role as Ohio STRS legal advisor.
Faber’s STRS audit was a whitewash in its practical effect
In December 2022, Faber announced that his special audit of the State Teachers Retirement System of Ohio found no evidence of fraud, illegal acts or data manipulation within its limited review. His office broadly reassured the public about the system’s controls and oversight.
I regard that as a whitewash in its practical effect: reassurance for the institution, insufficient accountability for the people paying its bills.
Faber did vaguely discuss investment fees, benchmarks, bonuses and secrecy. He weakly suggested reconsidering bonus arrangements and removing trade-secret protections. He did no real analysis that would lead to any real accountability or transparency a victory for the Epstein class.
Teachers needed a clear accounting of every layer of investment expense, a rigorous test of compensation against independently measured performance, and public access to the contracts governing their retirement money. They deserved more than recommendations that other officials debate whether the system should improve.
The scale is visible even in STRS’s own financial reporting. For fiscal 2023, STRS reported approximately $256 million in external asset-management fees, including approximately $181 million for alternative investments. Its notes explain that carried interest and certain other fund expenses appear within investment appreciation rather than that management-fee total. The headline fee number therefore does not tell the whole cost story. Faber helped enable and hide hundreds of other $millions in fees to Epstein-linked firms like Apollo and others.
An aggressive watchdog would make that distinction understandable to every teacher.
Yost pursued the reformers. Who investigates the establishment?
Under Republican Attorney General Dave Yost, Ohio pursued the removal of transparency advocates Wade Steen and Rudy Fichtenbaum over their dealings with a non-existent firm QED who receive $0 while ignoring hundreds of millions of hidden investment fees in secret no-bid contracts to Epstein linked firms like Apollo.
The corrupt AG Yost backed by corrupt Auditor Faber focused on a $0 issue while looking the other way at millions in excessive bonuses and hundred in excessive fees to Epstein class Wall Street firms.
Pension staff Compensation
Faber whitewashed the excessive compensation for public employees at the Ohio State Teachers Retirement Systems.
4 employees earned over $600,000.
20 employees earned over $400,000.
49 employees earned over $300,000.
85 employees earned over $200,000
STRSsalaries2024.csv
By comparison, the average Ohio teacher earns $68,000, with many retirees living on less than $45,000 per year — without a COLA.
A researcher from the conservative Heritage Foundation even found this excessive.
Epstein scrutiny must extend to pension relationships
Ohio’s Epstein discussion cannot stop with Les Wexner. Signal reported that Les Wexner directly gave Faber $15,000 in 2025.
Faber has received money from major Epstein banker JP Morgan.
My reporting has repeatedly raised questions about Apollo, its former leader Leon Black and Ohio public-pension business.
The Republican Attorney General’s Association RAGA is actively supporting Faber hrough Safer Ohio Fund, and its funding includes major banks and and a number of Apollo-controlled business (U.of Phoenix, ADT).
RAGA is actively supporting Faber through Safer Ohio Fund and they are well funded by Data Centers in the Millions.
Contributor
Combined receipts
Relationship to the issue
Dominion Energy
$1,100,000
Electricity supplier serving major data-center territory
Amazon.com Services
$305,000
Cloud/data-center operator
Google
$300,000
Cloud/data-center operator
Anthropic
$300,000
AI developer and computing customer
OpenAI
$225,000
AI developer and computing customer
Meta Platforms
$200,000
Data-center operator
Microsoft
$50,000
Cloud/data-center operator
Oracle
$50,000
Cloud/data-center operator
American Electric Power Service Corp.
$50,000
Electric utility
Vistra Corporate Services
$50,000
Power producer
Duke Energy
$25,000
Electric utility
Selected total
$2,655,000
The Center for Media and Democracy’s July investigation identified $250,000 each from Google, Anthropic and Dominion in the second quarter of 2026.
My August call for a data-center watchdog asked for something basic: identify the owners, disclose the public assistance, compare promises with results and determine who bears the risk.
Public pensions may also invest through managers active in digital infrastructure. That overlap requires a look through the investment structures; it does not prove that a particular pension dollar financed a particular Ohio facility.
The next attorney general should coordinate lawful investigations with auditors and regulators, scrutinize conflicts and misrepresentations, and pursue recovery where the evidence and law support it. Ohio also needs a searchable public record of these deals and legislation closing unjustified disclosure gaps.
Support Kulewicz—and demand a reform agenda
Kulewicz explicitly campaigns on confronting corrupt politicians and restoring transparency and accountability. His decades of litigation experience give him a credible foundation for that work.
I am endorsing him as the better opportunity for change, while asking him to make that promise concrete: independent pension-performance review; full investment-cost disclosure; scrutiny of compensation and consultant conflicts; examination of Epstein-linked financial relationships; and coordinated accountability for publicly supported data-center deals.
Ohio has had enough institutional reassurance. Teachers and taxpayers deserve answers about who receives their money, who benefits from secrecy and who is responsible when the public gets a bad deal.
John Kulewicz should be Ohio’s next attorney general. Then Ohioans should hold him to the standard Faber has failed to meet: follow the money, open the records and serve the public—even when the questions make powerful people uncomfortable.
A major new Wharton study documents how private-equity-owned insurers favor affiliated investments, pay higher prices, delay recognizing losses, and expose policyholders to greater risks. The danger does not stop with private equity. Traditional insurers must compete with this model, potentially pushing the entire industry toward riskier investments. Congress needs a federal insurance regulator before the next insurance crisis.
By Christopher B. Tobe, CFA, CAIA The CommonSense 401k Project | October 2026
Wharton Has Done What Insurance Regulators Should Have Done Years Ago
A remarkable new 2026 paper from the Wharton School at the University of Pennsylvania provides some of the strongest empirical evidence yet that private-equity ownership is changing the risks borne by American annuity holders.
The paper, “Buying from the Family: Private Equity-Owned Insurers and Their Affiliated Investments,” by Amy W. Huber, Stefan Huber, Bella Shan, and Christina Zhu, examines what happens when the same financial conglomerate controls both an insurance company and the businesses originating the investments that insurer purchases.
The findings should alarm retirement-plan fiduciaries, pensioners, insurance regulators, and members of Congress.
The researchers used detailed statutory insurance filings, security-level transaction records, ownership structures, independent valuations, and NAIC stress tests. They did not merely speculate about conflicts of interest. They examined how affiliated transactions actually differ from arm’s-length investments.
Their findings challenge the comforting insurance-industry narrative that investment-grade ratings, state regulation, and statutory reserves adequately protect annuity holders.
The evidence suggests something much more troubling: insurance companies can become captive financing vehicles for the investment businesses of their owners, while policyholders bear the consequences.
And there is an even bigger problem that deserves attention.
Once private-equity-owned insurers gain a competitive advantage from investing in higher-yielding, less-transparent private assets, what happens to traditional insurers that must compete against them?
They face pressure to follow.
That is how a problem concentrated in private-equity-owned insurance companies can become an industry-wide threat.
The Wharton Findings: Follow the Policyholders’ Money
The numbers are extraordinary.
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Wharton finding
Result
Assets of directly PE-owned insurers in 2024
$696 billion
Share of new PE-owned insurer investments going into structured securities
Over 40%
Share of those structured-security acquisitions issued by affiliates in 2024
Over 60%
Price premium on affiliated private securities in estimated primary-market transactions
47 basis points
Additional modeled capital loss in a 2008-like stress scenario
Approximately 4 percentage points
Average equity buffer relative to fixed-income portfolios
7.6%
Source: Huber, Huber, Shan and Zhu, September 2026, pp. 1–5, 20 and 27–28.
The authors find that directly PE-owned insurers allocate approximately twice as much of their new investment capital to structured securities as independent insurers.
More importantly, the majority of those structured-security purchases are issued by companies affiliated with the same private-equity owner.
This is not simply an insurer purchasing a diversified collection of independently originated investments.
It is a financial organization originating investments and then using an insurance company under common ownership to help finance them.
The traditional discipline of independent buyers negotiating prices, rejecting unattractive investments, and selling deteriorating assets can be weakened when the buyer and seller ultimately answer to the same financial conglomerate.
Wharton finds affiliated insurers pay more for the same investments
One of the study’s most revealing findings concerns pricing.
When comparing purchases of the same security on the same day, the researchers find that PE-owned insurers pay higher prices when buying from affiliated issuers.
For privately placed securities classified as primary-market transactions, the estimated premium is approximately 47 basis points of par value.
That is an especially powerful finding because the comparison controls for the security and transaction date.
The higher price benefits the affiliated issuer receiving financing.
But who bears the economic cost of the insurer paying more?
The insurance company does, and ultimately its financial strength supports the promises made to policyholders.
Wharton finds insurers are less willing to recognize deterioration in affiliated investments
The second finding is potentially even more troubling.
When affiliated investments fall below their historical cost, PE-owned insurers are less likely to recognize impairments and less inclined to sell those positions than their other investment holdings.
The researchers find that PE ownership offsets approximately 80% of the increased same-year impairment propensity otherwise associated with affiliated holdings.
This raises a basic question.
Is the insurer making investment decisions for policyholders, or is it protecting the financing needs and reported performance of affiliated investment businesses?
This pattern is consistent with affiliated insurers providing financial support when an independent investor might recognize a loss or exit.
And the researchers do not find that this favorable treatment is rewarded with superior investment performance.
Securities attracting greater affiliated PE-owned insurer investment have lower independent fair-value estimates beginning two years after purchase.
The supposed advantages of affiliated investing are not producing better results in the study’s comparisons.
The Most Frightening Number: Four Percentage Points of Additional Capital Loss
Wharton’s stress-test analysis should attract particular attention from insurance regulators.
Using NAIC CLO stress-test results and extending the findings to the broader structured-security portfolios of PE-owned insurers, the researchers estimate approximately four percentage points of additional portfolio losses under a severe financial-crisis scenario.
That compares with an average equity buffer equal to 7.6% of fixed-income investments.
In other words, the estimated additional losses alone could consume more than half that measured equity buffer.
The estimate extrapolates from stress-tested broadly syndicated CLOs to other structured securities whose stress performance cannot be directly observed.
But that limitation actually exposes another regulatory weakness: many of the private securities that deserve the closest examination are precisely those for which independent market prices and comparable stress data are most difficult to obtain.
If regulators cannot reliably measure the risk of the assets, why should policyholders accept assurances that statutory capital is adequate?
The Next Domino: Traditional Insurers May Be Forced to Take More Risk
Here is where I would take the Wharton findings a step further.
The paper concentrates on insurers directly owned by private-equity firms.
But competition does not stop at corporate ownership boundaries.
Imagine two insurers competing for the same $1 billion pension risk transfer.
One insurer benefits from an affiliated private-credit origination business. It can purchase complex, higher-yielding private securities and potentially benefit from favorable regulatory capital treatment.
The second insurer operates more traditionally, relying more heavily on liquid, publicly traded investment-grade bonds.
If the first insurer can generate higher expected portfolio yields, it may be able to offer the pension sponsor a lower premium while still targeting an attractive profit margin.
What does the second insurer do?
It can lose business, accept lower profits, or move toward investments offering higher yields.
This is the competitive contagion that could transform a private-equity insurance problem into an entire insurance-industry problem.
Traditional insurers do not have to be purchased by Apollo, Blackstone, KKR, or another private-equity manager to adopt similar investment strategies.
They can increase allocations to privately originated loans, commercial mortgages, structured credit, asset-backed securities, fund-finance arrangements, and privately rated investments.
They can hire private-credit managers or establish investment partnerships without changing the insurer’s ultimate ownership.
The incentive is straightforward: if higher portfolio yields permit lower PRT bids, more competitive annuity crediting rates, or larger retained investment spreads, competitors will feel pressure to participate.
Not every insurer will respond by taking more risk. Stronger capital standards, conservative management, and independent investment governance can resist that pressure.
But absent meaningful regulatory discipline, competition can reward the companies most willing to stretch their balance sheets.
That is a classic race-to-the-bottom problem.
And unlike ordinary corporate competition, the potential losers include pensioners who may depend on one insurance company’s promise for the rest of their lives.
Private Credit Can Look Short-Term on Paper While Remaining Illiquid for 15 Years
Another major concern is the way insurers measure asset/liability risk.
A privately originated commercial mortgage may have a contractual maturity of 15 years but reset its interest rate every three months.
Because of the floating rate, the asset can exhibit relatively low sensitivity to changes in benchmark interest rates.
But that does not mean the mortgage is liquid.
It does not mean the borrower can repay principal tomorrow.
It does not mean the insurer can sell the mortgage at book value during a financial crisis.
And it certainly does not mean that a private AA rating guarantees the existence of an active secondary market.
A three-month interest-rate reset does not turn a 15-year private mortgage into a three-month investment.
Yet the industry’s emphasis on interest-rate duration, ratings, and book-value accounting can obscure the distinction between interest-rate risk, credit risk, and liquidity risk.
An insurer can appear to have reasonably matched assets and liabilities while holding assets that cannot be converted into cash without substantial discounts.
The risk becomes especially serious when a policyholder, retirement plan, or regulator needs cash precisely because the insurer’s creditworthiness has deteriorated.
The Wharton paper reinforces this concern by finding that PE-owned insurers concentrate affiliated investments in securities that independent investors find more difficult to value.
It also identifies structures such as rated feeder funds and special-purpose vehicles that can transform private-fund exposure into securities receiving favorable regulatory capital treatment.
The question for Congress is simple:
Are regulatory ratings and capital formulas measuring the actual economic risks, or are financial engineers designing investments to satisfy the formulas?
Lincoln Shows Why This Is Not Just a Private Equity Problem
Lincoln reported approximately 96.8% investment-grade assets, while also disclosing substantial allocations to private credit, structured investments, and mortgages.
I compared Lincoln National’s five-year credit-default-swap spread of approximately 130 basis points in mid-September with Prudential’s approximately 80 basis points.
These are holding-company CDS quotations, not direct measures of the credit risk of the annuity-issuing subsidiaries. Nevertheless, they provide a market-based signal that deserves attention alongside statutory capital and insurer financial-strength ratings.
My criticism was not that Lincoln was insolvent (yet) but that its current ratings were somewhat contradicted by its higher credit default swap rates..
It was that calling an investment portfolio high quality does not adequately disclose the economic risk borne by a retirement plan holding a general-account fixed annuity.
The Wharton findings strengthen that concern.
Insurers should not be able to rely on favorable ratings and regulatory carrying values while withholding the information necessary to evaluate private-credit liquidity, asset maturity, valuation uncertainty, and stressed losses.
And the competitive pressure from PE-owned insurers may encourage even traditional carriers to increase those exposures.
Pension Risk Transfers: One Insurer Replaces a Diversified Pension Plan
The implications for pension risk transfers are particularly serious.
When a traditional defined-benefit pension plan purchases a group annuity to settle pension obligations, retirees move from a federally regulated pension arrangement into an insurance contract.
The transaction can remove PBGC protection and ERISA plan-level fiduciary oversight of the transferred benefits.
The insurer becomes the entity responsible for paying benefits, often for decades.
The Wharton paper adds another reason why those questions matter.
What happens when the insurer receiving pension liabilities is part of a financial conglomerate that also originates and structures the assets purchased with policyholder-backed capital?
What happens when the insurer favors affiliated investments, pays more for them, and is reluctant to recognize deterioration?
And what happens when a traditional insurer competes for the same pension liabilities by increasing its own private-credit allocation?
The danger is not limited to whether the insurer can pay this year’s benefits.
A PRT annuity may require payments for 20, 30, or 40 years.
Fiduciaries should therefore evaluate the insurer’s ability to meet obligations through future credit cycles, not merely its current financial-strength rating.
The Diversification Lie: Thousands of Investments, One Insurance Promise
A general-account insurer may own thousands of bonds, mortgages, and private loans.
But a 401(k) participant invested in its fixed annuity generally does not own those investments.
The participant owns a contractual claim dependent on one insurer’s ability to pay.
The insurer may be diversified internally, but the participant remains exposed to a single insurance company.
That is why I favor enforceable downgrade provisions permitting retirement plans to exit at book value when an insurer’s financial strength deteriorates.
A downgrade clause could allow a plan to transfer its money to another financially sound insurer before severe deterioration makes withdrawal difficult.
The absence of such protections can leave participants captive to the very insurer whose creditworthiness has become questionable.
The Wharton findings make these contractual protections more important, not less.
If insurers hold growing concentrations of illiquid private assets, fiduciaries must understand how they will exit when those assets are hardest to sell.
A downgrade clause is not a substitute for adequate capital or regulation. It is an additional protection that should be evaluated, priced, and disclosed.
Weak State Regulation Is Enabling a National Problem
The United States regulates insurance primarily through state governments.
The NAIC coordinates standards, but it is not a national insurance regulator with independent authority to enforce every model rule.
Meanwhile, the largest insurance and asset-management conglomerates operate nationally and internationally.
Their investment structures can involve Delaware insurers, Iowa-regulated entities, Bermuda reinsurers, Cayman Islands investment vehicles, Luxembourg funds, and affiliated asset managers.
The same principle should apply to annuity insurers.
If an insurer invests through a Bermuda or Cayman structure, federal regulators should be able to trace the investment to its underlying economic exposure.
If an insurer purchases securities originated by an affiliate, regulators should be able to determine whether the transaction occurred at arm’s length.
If an investment receives an AA rating from a smaller rating agency, regulators should be able to examine the methodology, conflicts, underlying collateral, and actual trading evidence.
And if an insurer transfers liabilities to an offshore reinsurer, federal regulators should be able to evaluate the entire transaction, including the assets and capital supporting the obligations.
Financial conglomerates operate across state and national borders. Regulatory accountability should not stop at those borders.
CRS reported approximately $849 billion in private-credit holdings among life insurers in 2024 and identified concerns involving private ratings, affiliated investments, offshore reinsurance, and regulatory arbitrage.
Those numbers are not limited to directly PE-owned insurers.
The Wharton paper now provides additional evidence of why these issues deserve federal attention.
State regulators are supervising companies whose investment decisions can affect national retirement markets and potentially transmit losses into broader credit markets.
The authors explicitly identify the possibility that losses on affiliated investments could force insurers to sell other securities to restore capital, spreading stress beyond the original private-credit investments.
That is systemic risk.
It cannot be adequately addressed merely by reviewing whether each individual insurer satisfied its state’s statutory capital formula at year-end.
The financial system is interconnected. The regulatory response must recognize those connections.
Elizabeth Warren Is Asking Questions Congress Should Have Asked Years Ago
Senator Warren’s scrutiny of private-equity-linked insurers reflects a larger issue that should concern both political parties.
Americans depend on annuity contracts for retirement security.
Those promises should not depend on whether a small state insurance department has sufficient resources, independence, or expertise to examine a global private-credit conglomerate.
Congress should establish a national insurance regulator with genuine investigative, supervisory, and enforcement authority.
A CFPB-style model would put the interests of policyholders at the center, but the agency would also need powers the current CFPB does not possess: prudential supervision, capital and liquidity examinations, and oversight of insurance holding-company groups.
The goal should not be to replace every state insurance function.
It should be to establish enforceable national protections against risks that state-by-state regulation cannot adequately control.
Seven Federal Reforms Congress Should Enact
1. Require full transparency of private-credit and affiliated investments.
Large insurers should disclose private-credit exposures, affiliated transactions, underlying asset classes, valuation methods, ratings providers, contractual maturities, and liquidity characteristics in standardized, comparable formats.
2. Require independent valuations of affiliated investments.
Affiliated assets should receive independent valuation scrutiny, especially when they are privately placed, difficult to trade, or purchased from related entities. Regulators should compare carrying values with credible market-based exit values.
3. Establish meaningful federal capital standards for private-credit risk.
Regulatory capital should reflect credit risk, concentration, valuation uncertainty, and liquidity. A privately rated AA security should not automatically receive favorable treatment when its underlying risk cannot be independently verified.
4. Require separate disclosure of interest-rate duration, credit-spread duration, and contractual maturity.
Insurers should not be permitted to use short floating-rate reset periods as a substitute for disclosing long-term principal exposure.
A 15-year private mortgage with a quarterly reset should be reported as exactly that.
5. Conduct federal systemic liquidity stress tests.
Regulators should test what happens when multiple insurers simultaneously experience private-credit losses, rating downgrades, reduced new premiums, and demands for cash.
The stress tests should include the possibility that several insurers attempt to sell similar illiquid assets at the same time.
6. Strengthen retirement-annuity protections.
For ERISA fixed annuities and PRT contracts, Congress should require clear disclosure of insurer credit and liquidity risks, meaningful comparisons among insurers, and competitive evaluation of enforceable downgrade protections.
For PRTs, fiduciaries should obtain competitive bids that explicitly price additional credit protections rather than assume such protections are unavailable.
7. Establish a federal insurance regulator with authority over entire financial groups.
A federal watchdog must be able to examine insurers, affiliated asset managers, reinsurers, and investment structures across state and offshore jurisdictions.
It must also have the authority to intervene before liquidity problems become insolvencies.
Disclosure without enforcement is not enough.
The Entire Industry Is Being Pulled Toward Greater Risk
The Wharton authors deserve enormous credit for bringing hard evidence to a debate too often dominated by insurance-company marketing and reassuring credit ratings.
Their research demonstrates that PE-owned insurers systematically behave differently when investing in affiliated securities.
They buy more structured credit, concentrate purchases among affiliates, pay higher prices in certain transactions, and are less inclined to recognize or exit deteriorating affiliated investments.
Their stress analysis indicates that the resulting downside exposure could be substantial relative to insurer capital.
But the greatest long-term danger may be what happens outside private equity.
When some insurers generate higher investment yields by accepting greater private-credit complexity, opacity, and illiquidity, competitors face pressure to do the same.
Traditional insurers may increasingly adopt the same investment strategies even without being acquired by private-equity firms.
The result could be an industry in which higher private-credit exposure becomes the competitive norm.
This is precisely why relying on state regulators, private credit ratings, and year-end statutory accounting is insufficient.
The financial crisis will not wait for regulators to discover that a portfolio with a short reported interest-rate duration contains 15-year loans that cannot be sold.
And retirees should not have to discover that their supposedly safe annuity is backed by investments whose risks were poorly measured, privately rated, or hidden inside affiliated structures.
The Wharton paper should become required reading for Congress, the NAIC, state insurance commissioners, pension fiduciaries, and every retirement consultant recommending annuities.
It provides evidence that the existing system deserves far more scrutiny.
Congress must now confront the broader question: If competition is pushing the entire annuity industry toward increasingly opaque and illiquid private credit, who is protecting the retirees who ultimately bear the risk?
The answer cannot remain 50 state insurance departments acting separately.
America needs federal insurance regulation, transparent private-credit accounting, credible systemic stress testing, and enforceable protections for annuity holders — before the next insurance crisis, not after.
APPENDIX
Remember AIG: A Highly Rated Insurance Giant Needed an $85 Billion Rescue
The Wharton study’s 2008-style stress test should remind Congress of something the insurance industry would prefer to forget: AIG.
In early 2005, AIG held an AAA credit rating from Standard & Poor’s. By September 2008, after successive downgrades, it was rated A− and required an emergency $85 billion Federal Reserve rescue to avert a potentially catastrophic failure.
AIG did not have to be rated junk before its liquidity crisis became overwhelming.
Its problems involved deteriorating mortgage-related securities, derivatives collateral calls, securities lending, and an inability to raise cash when counterparties lost confidence.
On September 15, 2008, rating downgrades generated more than $20 billion of additional collateral and termination-payment requirements over a short period.
The federal government intervened the next day.
Now consider what the Wharton researchers have found about today’s private-equity-owned insurers.
Their analysis of NAIC stress tests shows that additional losses associated with affiliated investments are largely invisible in moderate scenarios but become substantial under financial-crisis conditions.
Their estimated additional portfolio loss of approximately four percentage points would consume more than half the measured equity buffer of the PE-owned insurers in their sample.
And those losses are additional to the baseline stress losses.
The study does not predict another AIG. It documents a potential source of severe downside exposure that deserves much more scrutiny.
AIG demonstrated how rapidly investment losses, ratings downgrades, collateral requirements, and disappearing liquidity can interact.
Wharton demonstrates that today’s affiliated private-credit investments may contain risks that become visible only under severe stress.
Congress should not wait until another highly rated insurance conglomerate needs emergency federal support to discover that state regulation, favorable ratings, and statutory accounting failed to capture the full risk.
The lesson of 2008 is not that every insurer will fail. It is that even a large, highly rated financial institution can become a systemic threat when opaque credit exposures and liquidity obligations interact.
America needs federal insurance stress testing that measures not only investment losses, but also the cash insurers must produce when confidence disappears.
“Do not put all your eggs in the same basket,” or diversification, is one of the most important investment principles. Many annuities used in retirement plans such as fixed, index, and lifetime annuities in 401k type plans, have single-entity credit and liquidity risk. Many plans avoid annuities, but for those who do the risk could be mitigated by downgrade clauses or purchasing credit default swaps.
Harry Markowitz’s landmark 1952 paper, “Portfolio Selection,” established the foundation of modern portfolio theory: portfolio risk depends on how investments move together, as well as the risks of individual holdings. Combining investments with imperfectly correlated returns can reduce portfolio risk. Merely accumulating more securities offers less protection when they share the same underlying vulnerabilities. traders.berkeley.edu
ERISA §404(a)(1)(C) requires fiduciaries to diversify plan investments to minimize the risk of large losses, unless circumstances make foregoing diversification clearly prudent.
For fixed income investors, that principle has a practical application: spread exposure across independent issuers so that one company’s financial trouble cannot devastate the portfolio.
An annuity issued by a single insurer can concentrate participants’ retirement savings in one company’s ability to honor its promises. Executive Life’s failure and AIG’s need for an extraordinary federal rescue demonstrate why an insurance guarantee cannot substitute for evaluating credit and liquidity risk. Insurer distress could expose participants to payment delays, withdrawal restrictions, and/or losses. Plan fiduciaries who fail to prudently evaluate and monitor that concentration, assess exit rights, and document the justification for accepting the risk can increase their exposure to ERISA liability for resulting losses.
A downgrade clause would give a retirement plan a practical way to reduce single-insurer risk when the insurer’s financial strength deteriorates. For example, a plan could require an insurer to meet a specified AA financial-strength rating at purchase, with an enforceable right to withdraw the full contract value—including accrued interest—if its rating falls to A. The plan could then transfer the proceeds to another insurer meeting its AA standard, following appropriate due diligence. The principle is straightforward: participants should not become captive creditors of a weakening insurer because leaving would trigger a financial penalty. Downgrade clauses are not regularly offered in annuities because they are lest profitable to the insurer. The difference in costs or yield so annuities with and without downgrade clauses could be used as a way to measure risk related damages.
Credit default swaps offer another potential way to reduce an annuity’s single-insurer credit risk. A $100 million Lincoln fixed-annuity allocation illustrates why single-insurer risk should receive a dollar valuation. Applying the historical 97.8-basis-point Lincoln CDS spread reported for September 2025 produces an annual credit-protection cost equivalent of $978,000—approximately $4.89 million over five years before adjustments. That figure is a starting point for valuing the exposure participants bear. A damages estimate would refine it for the actual annuity issuer and contract, subtract the residual risk of the prudent alternative, and credit any additional compensation participants received. The absence of an insurer failure does not make the exposure economically worthless; it means the analysis must value the contractual risk rather than simply count unpaid benefits.
No one in Kentucky’s current election cycle has received more donations from the Epstein class.
There is no more serious connection to Epstein than Apollo and its founder/CEO Leon Black. From his conviction in 2008 to his death in 2019 Leon Black provided Epstein with over $158 million for “tax advice”, despite Epstein having no qualifications in that area. There are over 8000 mentions of Black in the Epstein Files. Current Apollo CEO Marc Rowan is also prominently featured in the Epstein files. Barr has accepted at least $37,500 from Apollo in 2025-26.
Howard Lutnick of Cantor Fitzgerald current Commerce Secretary, and Epstein neighbor sons and firm gave $8,500 to Barr. Lutnick lied about visiting Epstein Island in 2012 claiming he cut ties in 2005.
Stephen Schwatzman of Blackstone has only 179 mentions in the Epstein file. Blackstone has given Barr over $83 thousand.
Jes Daly of JP Morgan, which has given Barr over $25 thousand had extensive relationship with Jeffrey Epstein.
Andy Barr will be a proud protector of the Epstein class and the receipts prove it.
Comer should welcome every effective avenue for obtaining evidence. Instead, Comer publicly argued against the need for the very mechanism that ultimately helped produce the Epstein Files Transparency Act.
Comer eventually voted for that legislation when it passed the House 427–1 on November 18, 2025. That vote belongs in the record. It does not erase his earlier effort to persuade Americans that the pressure campaign was unnecessary.
A document dump is not the same as disclosure
Comer’s committee released more than 33,000 pages in September 2025. The number sounded impressive. But committee Democrats said approximately 97% of the material was already public. Louisville Public Media reported that the release largely contained information already known—and that the White House supported Comer’s process while fiercely attacking Massie’s effort.
When CNN confronted Comer with the 97% criticism, he pivoted to a comparison with Joe Biden and praised Trump’s cooperation.
That response exposed the political problem. Survivors needed an accounting of missing evidence. Comer offered a partisan comparison.
The proper measure of transparency is whether previously concealed evidence becomes available, whether withholding is justified and whether the public can determine what remains missing. Recycling thousands of pages cannot substitute for answering those questions.
Follow the money—after another delay
The financial records were central to understanding how Epstein operated.
On September 8, 2025, Comer’s committee promised to pursue additional bank records. On October 31, Khanna and other committee Democrats wrote to Comer pointing out that 53 days had passed without bank-record subpoenas being issued. Their letter demanded action and included a proposed document schedule covering financial transactions, communications and due diligence.
Comer subsequently subpoenaed JPMorgan Chase and Deutsche Bank on November 18. That was necessary investigative work. It also came more than two months after the committee publicly promised to pursue those records.
For anyone concerned about Wall Street’s role, that delay deserves scrutiny. Financial evidence should have been a priority from the outset.
The chairman repeatedly stepped into Trump’s defense
On August 18, 2025, Comer publicly praised the administration’s commitment to transparency as DOJ prepared to begin producing records.
On September 8, his official statement accused Democrats of politicizing the estate’s documents and emphasized that Trump was not accused of wrongdoing.
An investigator must distinguish evidence from insinuation. But the chairman’s job is to establish the facts wherever they lead. Repeatedly making the president’s political defense part of the committee’s message undermines confidence in that independence.
The committee’s own November release went further, describing testimony as having defeated Democrats’ allegations against Trump. The public-facing emphasis was unmistakable: protecting the president’s reputation had become part of the investigation’s presentation.
Massie and Khanna kept demanding enforcement
By January 2026, Massie and Khanna were asking a federal judge to appoint an independent monitor. They alleged missed deadlines, improper withholding and excessive redactions, alongside failures to protect survivors’ information.
In July, they introduced the Epstein Files Transparency Act II to provide additional avenues for challenging DOJ noncompliance in court.
Their persistence illustrates why assurances from committee leadership were inadequate. A transparency promise needs enforceable consequences.
Comer also took substantive steps that deserve acknowledgment. He subpoenaed banks and witnesses, issued a subpoena to Pam Bondi following a committee vote, and pursued Leon Black’s noncompliance. In September 2026, the House held Black in contempt after the committee unanimously recommended that action.
Those actions demonstrate that the committee possessed meaningful tools. They strengthen the case for demanding consistent, aggressive use of them.
The strongest case against Comer rests on his documented conduct: dismissing the need for the Massie–Khanna petition, defending the administration’s cooperation, delaying pursuit of banking evidence and repeatedly framing disclosures around Trump’s political defense.
Kentuckians should demand a public accounting of outstanding records, explanations for withheld material, equal treatment of witnesses and consequences for noncompliance.
Comer held the chairman’s gavel. He should be judged by how forcefully he used it to break secrecy—and by the occasions when he used his platform to tell Americans that the process they distrusted was working.
Kentucky Epstein Connections – Alvarado accuses Dembo, but has many of his own.
In the 6th District Congressional race Republican Ralph Alvarado accuses Democrat Zach Denbo of taking Epstein related donations from Reid Hoffman of LinkedIN. I applaud him for bringing out these facts. I think it is important to point out Alvarado’s far more serious Epstein ties.
There is no more serious connection to Epstein than Apollo and its founder/CEO Leon Black. From his conviction in 2008 to his death in 2019 Leon Black provided Epstein with over $158 million for “tax advice”, despite Epstein having no qualifications in that area. There are over 8000 mentions of Black in the Epstein Files. Current Apollo CEO Marc Rowan is also prominently featured in the Epstein files. Apollo owned Lifepoint Health gave a $10,000 donation to Alvarado.
Alvarado received substantial funding from the MAGA Inc. Superpac, whose donors include many Epstein buddies and those broadly in the Epstein Class. Howard Lutnick current Commerce Secretary, and Epstein neighbor gave MAGA Inc. $8.75mm and lied about visiting Epstein Island in 2012 claiming he cut ties in 2005. Ron Lauder a $5mm donor to MAGA Inc. who is best known for pushing Trumps “Greenland” initiative but files show that Epstein helped him establish an entity for him and Leon Black to jointly purchase a valuable painting which got 961 mentions in the Epstein files. . Stephen Schwatzman another $5mm MAGA donor has only 179 mentions in the Epstein file. Marc Rowan of Apollo gave $1mm to MAGA as well.
Documents show Epstein helped establish an entity through which Lauder and Black jointly acquired a valuable painting
As head of Kentucky Epstein Justice, I want to look at every congressional race the US Senate Race and the Louisville Mayor Race for Epstein related donations.
Jeffrey Epstein pal, billionaire Reid Hoffman gave $500K to the Dembo superPAC- almost half of the cash raised.
Hoffman once sent Epstein ice cream with a note that it was “for the girls”
So every time you see an ad meant to help Zach Dembo, it was probably paid for by the billionaire who sadistically sent ice cream to Jeffrey Epstein’s victims. Dembo wants power so bad he doesn’t care where the money came from.
This is dirty Epstein Class money fueling Zach Dembo’s campaign and it’s offensive that it’s taken this long for Kentucky to learn the truth.
In the 6th District Congressional race, Republican Ralph Alvarado accuses Democrat Zach Dembo of taking Epstein-related donations from Reid Hoffman of LinkedIn. I applaud him for bringing out these facts. I think it is important to point out Alvarado’s far more serious Epstein ties.
No one has a more serious connection to Epstein than Apollo and its founder/CEO, Leon Black. From his conviction in 2008 to his death in 2019 Leon Black provided Epstein with over $158 million for “tax advice”, despite Epstein having no qualifications in that area. The Epstein Files contain over 8,000 mentions of Black. Current Apollo CEO Marc Rowan is also prominently featured in the Epstein files. Apollo-owned Lifepoint Health gave a $10,000 donation to Alvarado.
Alvarado received substantial funding from the MAGA Inc. Super PAC, whose donors include many Epstein buddies and those broadly in the Epstein Class. Howard Lutnick, current Commerce Secretary and Epstein neighbor, gave MAGA Inc. $8.75mm and lied about visiting Epstein Island in 2012, claiming he cut ties in 2005. Ron Lauder a $5mm donor to MAGA Inc. who is best known for pushing Trumps “Greenland” initiative but files show that Epstein helped him establish an entity for him and Leon Black to jointly purchase a valuable painting which got 961 mentions in the Epstein files. Stephen Schwatzman of Blackstone, another $5mm MAGA donor, has only 179 mentions in the Epstein file. Marc Rowan of Apollo gave $1mm to MAGA as well.
