Delaware Life Insurance Company Invests 16.4 Billion in Private Loans Under Investigation
Delaware Life Insurance Company has relabeled 16.4 billion of its investments this year, placing the funds in private loans linked to affiliated companies. Federal prosecutors and securities regulators are investigating the matter. The funds originated from annuities and life policies sold to ordinary savers, many of whom are unaware of the underlying investments. The company's second-quarter filing disclosed grand jury subpoenas issued in February, which also affected Clear Spring Life and Annuity Company. The investigations by the US Attorney's Office in Manhattan and the Securities and Exchange Commission (SEC) focus on whether the loans should have been classified as related-party transactions. No charges have been filed yet. Credit rating agencies A.M. Best, Standard & Poor's, and Fitch have assigned an A-minus rating to Delaware Life, each with a negative outlook. A survey from August 26 revealed that 77% of US adults consider cryptocurrency risky in workplace retirement plans, with nearly half labeling it very risky. The insurance funds are backing loans without public market prices, raising concerns about risk perception among savers. The National Association of Insurance Commissioners (NAIC) reported that private equity firms owned 137 insurers by the end of 2024, up from 90 in 2018, collectively holding 704.3 billion. Early cashing out of annuities incurs a fee of about 10%, which decreases over time. The situation mirrors past events, such as Eurovita's solvency issues, leading to withdrawal freezes. While private credit is regulated and has an investment-grade label, stress signals have reached levels not seen since 2017.
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