Apollo’s former risk chief has warned that some Wall Street-backed life insurers will be ill-prepared to manage policyholder funds in a downturn, raising doubts about one of the past decade’s biggest financial trends.
Chak Raghunathan said some newer life insurers could struggle to stay afloat, citing their heavy reliance on private credit and newer savings products that may be vulnerable to policyholder withdrawals.
Raghunathan worked at Apollo from 2008 to 2014, lastly as chief risk officer, when the New York-based firm was building its insurance business, now known as Athene.
“When you’ve got asset manager owned insurers, who are not traditional life insurance people, you get in trouble, because the liquidity premium that has been assumed away is a significant risk,” he told the FT.
“Some of these guys, in my opinion, are going to be in trouble.”
Over the past decade, dozens of private capital firms, including Apollo, KKR and Blackstone, have built credit investment businesses that manage trillions of dollars of insurance liabilities. They have done so on the premise that higher-yielding, illiquid debt — which cannot quickly be sold for cash — pairs well with consumer annuity policies that may not require payouts for decades.
Raghunathan, who founded insurance consultancy Agam Capital, said risk-adjusted returns from private investments could fall short, hitting both the asset management and insurance arms of combined groups.
“You match your assets and liabilities based on duration buckets. If there’s a change in that expectation and you’ve got illiquid assets, you’ll be forced to sell in a market that’s going down,” he said.
He added that his warning did not apply to all such insurance platforms, but that he believed the model had shortcomings that had yet to become apparent.
Agam, which was founded in 2016 by Raghunathan and another former Apollo executive Avi Katz, specialises in “asset-liability matching” — helping clients shape investment portfolios after analysing the details of policyholder premiums.
Its clients have included 26North, Guardian Life, Prudential, Prismic, American Equity Investment Life and Ohio National.
Last week, Agam announced a partnership with 1823 Partners, an investment company founded by veteran US insurance executive Anant Bhalla, to work with insurers outside the US seeking combined asset-liability management advice and investment services.
The tie-up will initially target Japan, where the two men said the life and retirement sector was “undergoing significant regulatory and structural change”.
Bhalla echoed concerns about the growing weight of private credit in insurance portfolios, pointing to loan terms that offer weaker protections for lenders.
Private credit had “grown too much, too fast,” he said. “The bubble isn’t the growth of private credit, it’s the lack of lending standards.”
US annuity sales reached $464bn in 2025, double their 2019 level, according to the trade association LIMRA.
More people are seeking the income guarantees of products such as registered index-linked annuities, which are tied to a market index but offer higher potential returns as well as downside protection that limits losses.
Such products can be cashed in early but incur “surrender” penalties, which insurers say limit their exposure to a surge in redemptions. However, Bhalla said bonuses given to new customers and other special policy terms offered by recent private equity-backed entrants had eroded these protections.
“Product designs have become more aggressive, and incentivise people to not worry about surrender charges,” Bhalla said.
Executives at Apollo and other industry leaders have dismissed concerns about private credit risk, saying the debt on insurers’ balance sheets is largely highly rated, senior corporate loans backed by collateral.
“Insurance companies worldwide are desperate for assets that offer excess return per unit of risk. You cannot run an insurance company successfully and profitably if your only access is what exists in the public market,” Apollo chief executive Marc Rowan told an industry conference last year.
Apollo has previously said it faced few withdrawals or surrender requests during the 2023 Silicon Valley Bank crisis, and that it is more conservatively managed than rivals.
Regulators around the world are increasingly assessing the business models of private equity-backed insurers to assess potential contagion risks.
Raghunathan said that even so, customer behaviour would remain central to the success of the model.
“To assume policyholders and retirees are going to behave one way based on historical trends . . . may not hold true.”
He added that changes in “the way the products are being sold, who’s selling it, and the new players who’ve come in, who are more asset management driven, is shifting the risk curve”.
