Delaware Life Insurance Company reclassified $16.4 billion in investments into private loans, prompting investigations by federal prosecutors and the SEC. The…
Delaware Life Insurance Company has reclassified $16.4 billion of its investments this year. The funds are now placed in private loans linked to entities with which it is connected. Federal prosecutors and securities regulators are investigating the matter.
The money came from annuities and life policies sold to ordinary savers. Most of those policyholders are unaware of what underlies the promises made to them.
In its second-quarter filing, the company disclosed that grand jury subpoenas were served in February. Clear Spring Life and Annuity Company received similar subpoenas.
The subpoenas originated from the U.S. Attorney's Office in Manhattan. The SEC has also launched a parallel investigation.
Delaware Life restated its related-party investments from ~$1.3B to ~$18B after grand jury subpoenas.
— Eric Jackson (@ericjackson) August 14, 2026
Bloomberg had that in July.
Nobody printed what is in the next column: $25,121,775,179 across both insurers. 43% of everything they own.
The investigations are focused on a single question: whether loans arranged by an affiliate should have been disclosed as related-party transactions. No charges have been filed yet.
Credit rating agencies have already acted. A.M. Best, Standard & Poor’s, and Fitch have each assigned Delaware Life an A-minus rating, with all three attaching a negative outlook or placing it on watch.
A survey released on August 26 revealed that 77% of U.S. adults consider crypto risky within workplace retirement plans, with nearly half describing it as very risky.
“Americans are telling us that retirement security is becoming harder to achieve as they struggle with the affordability of everyday life. Housing, healthcare, debt and other expenses are competing with the need to save for retirement,” Dan Doonan, NIRS executive director, said in the report.
The insurance premiums from these savers were already being used to fund loans without public market prices. That disparity reveals much about how policyholders assess risk.
Private equity firms have been the driving force behind this change. At the end of 2024, the National Association of Insurance Commissioners (NAIC) reported that 137 insurers were owned by private equity, up from 90 in 2018. Those firms collectively held $704.3 billion.
Illiquidity becomes a problem only when policyholders demand their money back. And they can do so.
According to the Bank for International Settlements (BIS), cashing out an annuity early typically incurs a fee of about 10%, which decreases annually.
Annuity policyholders pay surrender charges (7-10% in years 1-7).
— Nick Nemeth (Mispriced Assets) (@NickNemo17) May 19, 2026
That friction is what holds the platform together.
But:
• $82.1B annual inflows = Ponzi mechanic
• 1M+ savers, mostly retirees who watch the news
• A single Gretchen Morgenson NBC story + 60 minutes = run…
About half of global surrender values can be withdrawn within a week, while the underlying loans can take months to sell.
The case of Eurovita illustrates what can follow. The Italian life insurer saw its solvency ratio drop from 230% to nearly 130% over the course of 2022.
Interest rates climbed, bond values declined, and policyholders began to cash out.
Cinven, Eurovita's private equity owner, offered €100 million, but the regulator demanded €400 million.
Italy imposed a freeze on withdrawals in February 2023, which lasted until October. Five competing insurers took over the policies, and savers suffered no losses.
Eurovita/Cinven: flop raises concerns on buyout push into insurance https://t.co/V3MlNKsXPL | opinion
— Financial Times (@FT) July 3, 2023
Private credit is not the same as cryptocurrency. It is regulated, carries an investment-grade rating, and is backed by decades of actuarial mathematics.
Nonetheless, stress signals in private credit have reached levels not seen since 2017. The key difference is that savers explicitly chose to take on one of these risks.
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Disclaimer: this article comes from third-party media and is provided for reference only. It does not constitute investment advice. Crypto and other financial products carry significant price volatility risk, so please make your own decisions carefully.
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