Hi WSO - perhaps an unusual topic/question. I've become interested in the relationship dynamics between PE and insurers. For example, the Apollo / Athene relationship - essentially, Apollo built Athene (a life insurer) to effectively increase the amount of capital they manage, a strategy employed at a time when liquidity was lacking. I'm sure this is a strategy that other funds try to emulate - I remember Cornell Capital invested in Talcott Resolution a couple of years back.
Is anyone familiar with and can suggest any primers / books / academic papers / etc. that are helpful for understanding the dynamics behind these relationships? As well as the math / more technical aspects of evaluating these businesses? I've read the public filings but they are obviously limited and only helpful up to a point. I've never worked with a company in the insurance/finance space so I'm interested in doing a bit of independent reading here, and have a preference for the wonk-ish. Thanks!
I think a company called Berkshire Hathaway run by a guy named Warren Buffett may have dipped its toe into insurance as a way of leveraging float for investments
I think @jm28 covered it fairly well, but insurance companies (esp. life insurers), have very sticky capital bases due to the long duration of their liabilities, which creates the opportunity for these companies to take longer term risk (and allows them to invest in relatively illiquid assets). Someone else already mentioned it, but these companies historically have been very conservative investors, partially due to regulatory reasons and also partially due to the general conservative culture of most life insurers. Because of these flaws, there seems to be a large trend of PE/alternative asset managers trying to raise money from insurance companies due to capitalize on this opportunity. Blackstone for instance just started an Insurance Solutions Group which is planning on raising hundreds of billions from insurers (you also have outright purchases or partnerships in the case of Athene/Apollo). As for primers, books, etc., there likely isn't anything out there intended for formal education. You could try to read through some of Apollo's public filings, or you could try learning more about the insurance industry, their costs of capital, typical investment portfolios and net yields, and it will likely make more sense as to why this trend is occurring and the mechanics of the PE/alt. asset managers/insurer relationship.