Can someone explain in simple terms how buying insurance assets adds value to PE firms and why the recent uptick in insurance acquisitions? Apollo buying Athene, KKR buying Global Atlantic, Brookfield buying American National, BX starting an insurance arm (?). After reading some materials, still don't quite get it. Thanks!
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It's a cash machine. Low-cost insurance float from a well-managed risk underwriting business to juice return profiles. Just look at what Buffett has done owning National Indemnity, GEICO and General Re.
From a GP perspective insurance business actually somewhat cannibalizes value as it brings down DE multiple but the tradeoff is ultimately worth it, at least it should be given how many PE firms are expanding into this product
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