The National Association of Insurance Commissioners said state regulators are continuing to review the investments and capital arrangements of life insurers owned by private equity firms, arguing that an additional federal framework is not necessary. The response came after Senator Elizabeth Warren sought information about risks tied to private equity investment in life insurance, including federal inquiries involving Los Angeles Dodgers owner Mark Walter and two life insurers linked to his businesses.
NAIC declines details on two insurers
In a September 24 letter, the NAIC responded to Warren's earlier request for information. Warren, the senior Democrat on the Senate Banking Committee, asked the organization to explain the risks that private equity ownership may create for insurers, including whether policyholder premiums were being invested in higher-risk assets and whether investments had been omitted or misclassified in regulatory filings.
Warren focused in particular on Delaware Life and Clear Spring Life and Annuity. Both companies are owned by Walter's Guggenheim Partners and are subject to federal-level investigations. The state insurance commissioners did not provide specific regulatory information about either company in their letter.
The concerns surrounding private equity involvement in the life insurance sector include related-party transactions, inflated management fees and potential conflicts between an insurer and affiliated investment platforms. Warren also asked the NAIC to answer more than a dozen related questions and to explain how insurers ensure that premium income is not directed into investments that fail to meet risk-management requirements.
Regulators report no major violations so far
The letter was signed by Scott White, Virginia's insurance commissioner and NAIC president, and Elizabeth Kelleher Dwyer, director of Rhode Island's Department of Business Regulation and the NAIC's president-elect. Utah Insurance Commissioner Jon Pike and Michael Wise, director of the South Carolina Department of Insurance, also signed the response.
The NAIC said it had not identified any significant cases to date in which private companies used policyholder premiums for high-risk investments while failing to disclose or properly classify those investments. White and the other regulators also emphasized that state insurance laws already require life insurers to maintain reserves sufficient to cover expected unpaid losses and claims obligations. In New York, for example, insurers must hold reserves adequate to pay all losses and claims they may become liable for.
Warren also raised questions about a change in the reported share of Walter's company assets linked to the two life insurers. The figure was initially disclosed at about 3% of company assets and was later revised to 42%. Warren said the change contributed to the federal investigation.
Oversight evolves with private-market exposure
The NAIC said the insurance regulatory system has continued to change as insurer ownership structures and investment strategies have evolved. In recent years, state regulators have updated capital requirements, reporting standards, supervisory tools and analytical capabilities to identify emerging risks while preserving insurers' solvency and policyholder-protection obligations.
The NAIC said modernizing those tools does not indicate that the state system has a gap requiring federal safeguards. Instead, it said the changes show that state regulators are updating prudential standards in response to market developments.
During the ultra-low interest-rate period before 2022, many insurers increased their exposure to complex private-market assets in an effort to improve investment returns. The NAIC said these assets can include instruments offering higher yields but limited liquidity, whose cash-flow performance requires closer scrutiny when markets come under stress.
In response, the NAIC adopted a principles-based definition of bonds in 2025. The approach requires securities to be classified according to underlying cash flows and credit enhancement rather than relying only on a product's name or legal form. The organization has also tightened oversight of residual tranches and private-credit ratings to prevent structures from avoiding direct NAIC review.
Offshore reinsurance and reserves draw scrutiny
The NAIC has also revised actuarial guidance for assessing whether complex, high-yield assets can generate enough cash flow during periods of market stress to meet insurance obligations. At the same time, state regulators are increasing supervision of the asset-intensive reinsurance market.
In recent years, U.S. insurers have transferred billions of dollars in annuity and life-insurance obligations to offshore affiliates or captive reinsurers. These entities are often based in jurisdictions with lower capital requirements. As a result, state regulators are examining whether reserves and supporting capital remain adequate after the liabilities are transferred.
State regulators are also considering additional guidance for year-end 2026 filings. The guidance would require insurers to provide more detail on how reserves are calculated, which assets support them and why reserve levels have declined. Beginning with year-end 2026 filings, insurers will also have to report private investments using a standardized data set.
The dispute over private equity-owned life insurers is therefore likely to remain focused on asset valuation, related-party transactions, reserve coverage and disclosures involving offshore reinsurance. The NAIC's response shows that state regulators intend to address those issues through updated reporting and capital rules, while the two insurers connected to Walter and the changes in their disclosed asset exposure remain specific points of attention for the federal investigation and market participants.