Federal prosecutors and the SEC are investigating Delaware Life Insurance Company after the firm relabeled $16.4 billion in private loans tied to its own corporate affiliates.

Key Points

• Delaware Life and Clear Spring Life and Annuity Company received grand jury subpoenas from the U.S. Attorney’s Office in Manhattan regarding potential related-party transaction disclosures.
• The SEC has launched a parallel investigation into whether the insurer properly flagged loans introduced by affiliated entities.
• Credit rating agencies including A.M. Best, S&P, and Fitch have assigned a negative outlook to Delaware Life following the disclosure of these investment practices.
• Private equity firms now own 137 U.S. insurers, holding a combined $704.3 billion in assets that often include illiquid private credit investments.
• Regulators are concerned about liquidity mismatches, as many annuity holders can withdraw funds quickly while the underlying private loans take months to sell.

Why it Matters

This investigation highlights growing regulatory scrutiny over the shift toward private credit within the insurance industry, which manages billions in consumer retirement savings. If liquidity crises occur, the mismatch between rapid withdrawal rights and illiquid assets could force interventions similar to the 2023 collapse of the Italian insurer Eurovita.