At a glance
- Cornell, chief investment officer—insurance, argues that insurers are entering a phase defined by broader capabilities, deeper specialization and growing allocations to private assets.
- Advisors and allocators evaluating an insurer-backed retirement or annuity product get a due-diligence question from Cornell's framework: whether the carrier's private-credit and commercial-mortgage holdings are matched to the liabilities behind them.
- Cornell dates the shift to the aftermath of the 2008 financial crisis, when insurers built larger capital buffers while still needing risk-adjusted returns.
US life insurers transferred more than $100 billion of liabilities to reinsurers last year, according to S&P Global data cited by Geoff Cornell in an Oct. 26 commentary for Insurance AUM Journal.
Cornell, chief investment officer—insurance, argues that insurers are entering a phase defined by broader capabilities, deeper specialization and growing allocations to private assets. He expects those moves to lift industrywide private-asset exposure and make underwriting expertise more important.
Advisors and allocators evaluating an insurer-backed retirement or annuity product get a due-diligence question from Cornell's framework: whether the carrier's private-credit and commercial-mortgage holdings are matched to the liabilities behind them. Life books may hold private credit, commercial mortgages and asset-based finance, while property-casualty books may use shorter-duration private assets to improve earnings quality. The life-book constraint is managing liquidity risk holistically, because long-dated liabilities can support less liquid, higher-yielding holdings.
Cornell dates the shift to the aftermath of the 2008 financial crisis, when insurers built larger capital buffers while still needing risk-adjusted returns. The other side of that trade, he writes, is that life insurers are becoming a critical source of long-term capital for private lenders.
Equitable and Corebridge test the scale case
If approved, Cornell writes, the proposed merger of Equitable Holdings and Corebridge Financial would create the largest life and retirement company by earnings and cash generation and one of the largest retirement, life insurance and asset management platforms in the US. He adds: "We don't believe that mergers like these should be about size for its own sake. The strategic goal, in our view, is functional scale and the re-pooling of risk to achieve diversification." Approval is the open condition; his case for a larger private-asset allocation rests on liability structure rather than any single combination.
Reported by the Insurer portfolios desk from Insurance AUM Journal and S&P Global, as cited in Insurance AUM Journal. Published . Corrections