CryptoSlate
Delaware Life Insurance Company's 2025 annual filing was restated to show roughly $17 billion of related-party holdings, up from $1.4 billion in the prior version and equal to about 39% of invested assets. A separate correction at Clear Spring Life and Annuity added another $4.6 billion, bringing the total above $20 billion across insurers connected to financier Mark Walter. Both companies are now under federal scrutiny: Delaware Life's second-quarter filing disclosed grand jury subpoenas from the US Attorney's Office for the Southern District of New York in February, while the SEC opened a parallel inquiry into whether affiliated private-credit deals carried the right related-party labels.
Why it matters
The episode reframes an opaque corner of US credit markets as a federal investigation. NAIC data shows 137 US insurers owned by private-equity firms at year-end 2024, up from 90 in 2018, holding $704.3 billion of cash and invested assets, equal to 7.8% of the roughly $9 trillion held by US insurers. Life insurance accounted for 96% of that group, and the count reached 139 by June 2025. Federal Reserve research found that life-insurer-affiliated managers held about 35% of broadly syndicated loans and 40% of middle-market loans routed through CLOs, while overseeing 72% of industry general-account assets. The pattern gives a single set of affiliates the capacity to route, price and hold a meaningful slice of US private credit.
Market impact
The risk is structural rather than immediate. Insurance liabilities are long-dated, but BIS research shows global surrender values can equal 30% of life-sector assets, with about half redeemable within a week. A sustained 25bp annual rate rise could force ~2% annual asset sales, manageable in calm markets and painful when several firms want liquidity at once. Derivative collateral, CLO maturities and Federal Home Loan Bank advances run on contractual schedules that move independently of actuarial forecasts, and 28 private-equity-owned insurers carried close to $26 billion of FHLB advances at year-end 2024, equal to 16% of all insurer FHLB borrowing. The Italian insurer Eurovita saw its solvency ratio fall from 230% to 130% by the end of 2022 as bond losses and policy surrenders fed on each other, and the episode ended in a temporary redemption freeze in February 2023.
Frequently asked questions
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What did Delaware Life restate in its 2025 annual filing?
Delaware Life restated its 2025 annual filing to show roughly $17 billion of related-party holdings, up from about $1.4 billion in the prior version and equal to roughly 39% of invested assets.
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Which federal authorities are now investigating the insurers?
Delaware Life's Q2 filing disclosed grand jury subpoenas from the US Attorney's Office for the Southern District of New York, and the SEC opened a parallel inquiry into related-party labeling of affiliated private-credit deals.
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How large is the private-equity-owned US insurance sector?
NAIC data shows 137 PE-owned US insurers at year-end 2024, up from 90 in 2018, holding $704.3 billion of cash and invested assets, or roughly 7.8% of the $9 trillion US insurance industry total.
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What is the liquidity risk facing life insurers in a stress scenario?
Insurance liabilities are long-dated, but BIS research shows global surrender values can equal 30% of life-sector assets, with about half redeemable within a week, so a sustained 25bp rate rise could force ~2% annual asset sales.
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How concentrated is the rating exposure at Delaware Life and Clear Spring?
Egan-Jones was the sole known rating provider for ~16% of Delaware Life's $32 billion bond portfolio and at least half of Clear Spring's $6.3 billion book, with related parties paying the firm about $8 million since 2024.
Benjamin Cowen
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