Private Equity Firms Leveraging Insurance Reserves for Success
- Mike Bishop JD
- May 31
- 5 min read
Introduction
Private equity firms have increasingly turned to insurance company ownership to access stable, long-term capital through premium reserves. These reserves, collected from policyholders, are invested to generate returns, enabling firms to fund acquisitions and other investments.
Here's a summary of how Apollo Global Management, KKR, Eldridge Industries, and others have utilized this strategy, with a focus on Eldridge’s role and potential untapped opportunities. We also address Jefferies Financial Group (formerly Leucadia) who got the their start by acquiring a life insurance company.
Private Equity Firms Leveraging Insurance Reserves
Apollo Global Management
Apollo pioneered the use of insurance reserves by co-founding Athene in 2009, a leading provider of annuities. Athene’s assets, estimated at $274 billion, constitute approximately 50% of Apollo’s $548 billion AUM as of 2022 (Apollo Global Management - Wikipedia). Apollo manages Athene’s reserves, investing them in credit, private equity, and other alternative assets, which has significantly driven its growth. The Wall Street Journal noted that half of Apollo’s $523 billion AUM in 2023 came from Athene, underscoring its importance (Private Equity’s Newest Play - The American Prospect). This model has made Apollo a leader in integrating insurance capital with private equity, contributing substantially to its profitability and deal-making capacity.
KKR
KKR entered the insurance space by acquiring a controlling stake in Global Atlantic in 2020, completing full ownership in 2024 for $2.7 billion (KKR Completes Acquisition of Remaining 37% of Global Atlantic). Global Atlantic’s $158 billion AUM represents about 29% of KKR’s $553 billion total AUM as of 2023 (Kohlberg Kravis Roberts - Wikipedia). KKR manages Global Atlantic’s investment portfolio, directing reserves into private equity, credit, and real assets, enhancing fee-related earnings and investment flexibility (KKR to buy remaining stake in insurer Global Atlantic for $2.7 billion | Reuters). While significant, Global Atlantic is a smaller component of KKR’s diversified portfolio compared to Apollo’s reliance on Athene.
Eldridge Industries
Eldridge Industries, founded by Todd Boehly, owns Security Benefit and Everly Life, with combined insurance assets of approximately $50.3 billion—$49.9 billion from Security Benefit and $0.433 billion from Everly Life (Eldridge Industries - Wikipedia; About Everly Life Insurance). These assets account for about 68% of Eldridge’s $74 billion AUM, indicating a heavy reliance on insurance capital (Eldridge Industries to Launch Asset Management, Insurance Holding Co. - Connect Money). Eldridge’s asset management division, Eldridge Capital Management, likely directs these reserves into investments across corporate credit, real estate, and sports and entertainment, supporting its diverse portfolio. As a newer and smaller player, Eldridge’s concentrated strategy positions it for potential innovation.
Other Notable Firms
Blackstone: While not owning an insurance company outright, Blackstone manages significant insurance assets through partnerships, such as with Resolution Life, leveraging reserves for investments (Private Equity’s Newest Play - The American Prospect).
Carlyle Group: Carlyle has pursued insurance carrier deals, managing assets for insurers to fund its investment activities, though it’s less prominent in direct ownership (KKR covering 'well-trodden ground' in insurance company acquisition | S&P Global Market Intelligence).
Jefferies Financial Group (formerly Leucadia): Jefferies held a 23% stake in HRG Group, which owned Fidelity & Guaranty Life until 2017. HRG merged with Spectrum Brands in 2018, and Fidelity & Guaranty was acquired by CF Corporation in 2017, then by Fidelity National Financial in 2020 (F&G - Wikipedia). Thus, Jefferies no longer owns insurance companies and does not currently use this strategy (Jefferies Financial Group - Wikipedia).
Contrasting Strategies and Eldridge’s Role
Scale and AUM
The firms differ significantly in scale:
Apollo: $548 billion AUM, with $274 billion from Athene (50%).
KKR: $553 billion AUM, with $158 billion from Global Atlantic (29%).
Eldridge: $74 billion AUM, with $50.3 billion from insurance (68%).
Apollo and KKR’s larger AUMs provide greater deal-making power and access to larger transactions, but their size may limit agility. Eldridge’s smaller scale allows for flexibility and potentially quicker adaptation to market opportunities.
Reliance on Insurance Assets
Eldridge’s 68% insurance AUM ratio is notably higher than Apollo’s 50% and KKR’s 29%, suggesting a more concentrated reliance on insurance reserves. This concentration may expose Eldridge to greater risks from insurance market fluctuations but also offers a focused platform for leveraging these assets. Apollo’s long-standing integration with Athene provides a balanced approach, while KKR’s diversified portfolio dilutes the relative impact of Global Atlantic.
Experience and Track Record
Apollo has over a decade of experience with Athene, establishing a robust model for managing insurance reserves (Apollo Global Management - Wikipedia). KKR, with Global Atlantic since 2020, is building on this strategy but benefits from its broader private equity expertise (Kohlberg Kravis Roberts - Wikipedia). Eldridge, a newer entrant–
Table: Comparison of Private Equity Firms Using Insurance Reserves
Extent of Success Driven by Insurance Holdings
The success of these firms is significantly influenced by their insurance holdings:
Apollo: Athene is a major profit driver, contributing roughly half of AUM and substantial fee income. Apollo’s CEO has emphasized Athene’s role in its business model, making it a cornerstone of its success (Apollo Global Management - Wikipedia).
KKR: Global Atlantic enhances KKR’s investment capacity and fee-related earnings, but its diversified portfolio means insurance is one of many drivers. Its $158 billion AUM from Global Atlantic supports significant deal-making (KKR to buy remaining stake in insurer Global Atlantic for $2.7 billion | Reuters).
Eldridge: With 68% of AUM from insurance, Security Benefit and Everly Life are likely central to Eldridge’s investment strategy. As a private company, exact financial contributions are less transparent, but the high AUM ratio suggests significant reliance (Eldridge Industries - Wikipedia).
Jefferies: No current insurance holdings mean this strategy does not contribute to its success today, though past ownership of Fidelity & Guaranty Life via HRG Group may have played a role historically (Jefferies Financial Group - Wikipedia).
Eldridge Industries: Opportunities and Undertapped Uses
Eldridge’s recent launch of an asset management and insurance holding company with $74 billion AUM signals ambitious growth plans (Eldridge Industries to Launch Asset Management, Insurance Holding Co. - Connect Money). Its smaller size and diverse portfolio (including technology, media, and sports) offer unique opportunities:
Innovative Investment Strategies: Eldridge could allocate insurance reserves to emerging sectors like fintech or sustainable energy, aligning with its tech investments like Zinnia (Eldridge Industries - Wikipedia).
Niche Insurance Products: Everly Life’s digital-first approach could expand into new insurance products tailored to younger demographics, increasing premium inflows (About Everly Life Insurance).
Geographic Expansion: Entering international insurance markets could diversify its reserve base, though regulatory complexities may pose challenges.
Integration with Portfolio: Eldridge could use insurance capital to support its media and entertainment ventures, such as sports franchises, creating synergies across its holdings.
These opportunities are undertapped due to Eldridge’s relative youth and smaller scale compared to Apollo and KKR. Its agility may allow it to experiment with bespoke strategies, unlike the more established models of its peers.
Regulatory and Risk Considerations
Using insurance reserves involves regulatory oversight and risks:
Regulation: Insurance companies face strict capital and investment requirements, limiting the risk profile of assets (Insurance Topics | Private Equity | NAIC). Private equity firms must balance high-yield investments with compliance.
Market Risks: Interest rate fluctuations and economic downturns can affect insurance portfolio performance, impacting reserve availability (Private capital in insurance 2.0: Building the flywheel).
Reputational Risks: Aggressive investment strategies may draw scrutiny, as seen in concerns about Apollo’s Athene investments (Private Equity’s Newest Play - The American Prospect).
Eldridge, with its high insurance AUM ratio, must navigate these risks carefully to sustain its strategy.
Conclusion
Apollo Global Management, KKR, and Eldridge Industries exemplify how private equity firms leverage insurance reserves to drive investment success. Apollo’s pioneering model with Athene, KKR’s strategic acquisition of Global Atlantic, and Eldridge’s concentrated approach with Security Benefit and Everly Life highlight varied implementations. Eldridge’s high reliance on insurance assets and smaller scale offer opportunities for innovation, such as new products or sector-specific investments, though it must address regulatory and market challenges. Jefferies Financial Group, despite historical ties to insurance, does not currently employ this strategy, limiting its relevance here.
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