The Institutional Risk Analyst

Large private credit/equity firms have taken control of many life and annuity insurers over the past decade, transforming them into higher risk, less transparent insurers. For the record, most of the for-profit insurers are also higher-risk, less transparent entities; but generally, not as extreme as the carriers controlled by private credit and private equity sponsors.

Even a small decrease in prepayments due to higher LT interest rates could significantly impact the fair value of the Bank of America mortgage portfolio, forcing unrealized losses higher. If LT rates continue to rise, one veteran banker told The IRA yesterday, then BAC and several other large banks are going to start to literally shake apart from unrealized losses on COVID era assets.

Is the flow of toxic waste pouring from busted private equity portfolios into credit trades a threat to insurance companies? Yup.

Bitcoin and Tether are technologically enabled forms of financial fraud