Iowa insurance commissioner Doug Ommen has raised alarms about insurers' shift into riskier private investments since Apollo and other private capital groups entered the retirement insurance business. The transformation has seen insurers move from government and corporate bonds to higher-yielding private credit loans and complex bundled securities, with more than $1tn of policyholder obligations now held in offshore reinsurance hubs like Bermuda and the Cayman Islands.

This change presents new challenges for state regulators who must monitor increasingly complex balance sheets. Ommen, who previously served as Missouri's securities commissioner, acknowledged his expertise lies more in retiree contracts than the assets backing them. The Iowa regulator has hired additional staff and appointed chief investment specialist Carrie Mears to help navigate these challenges, working closely with insurers like Athene on so-called 'permitted practices' and exemptions from standard rules.

While Ommen sees potential benefits in diversification and higher returns from private investments, he warns that 'there's a wide variety of quality' in the complex securitisations now appearing on insurers' balance sheets. Some lower tranches are 'less appropriate' for backing retirement obligations. The National Association of Insurance Commissioners is updating its rules on capital requirements for structured securities, while regulators grapple with transparency concerns about offshore reinsurance hubs that have become increasingly popular with private capital groups.