Worrying news from the Financial Times about regulation of insurance companies in the United States. Who calls the rules on insurance? It looks like Wall Street.

This may sound a remote story from the other side of the pond, but Apollo which owns Athene and sister company Athora, own PIC.

Athene and Athora pay and will pay annuities to a growing number of those who built up pensions through working in UK companies that paid pensions overseen by trustees. Again from the FT

In 2022, the Apollo insurance subsidiary, Athene, bought more than $1bn of assets from UK pension funds during a crisis triggered by the UK’s disastrous “mini” Budget.

Lee Harris is saying that her reporting in London is making the same warnings. Read on to hear those warnings in Iowa , they are the warnings we should be aware of in London and increasingly are. Thanks Lee.

Here is the article that Lee Harris refers to.

Frederick Haskins  |  Guest columnist

Fresh off his Democratic U.S. Senate primary victory, Josh Turek has built his campaign on the simple argument that Wall Street has amassed too much power over Iowans. That concern comes into focus in the state’s insurance oversight, where the Iowa Insurance Division and the National Association of Insurance Commissioners are working closely with large insurers, helping shape the very system they’re supposed to police.

Iowa Insurance Commissioner Doug Ommen’s job is to make sure life insurers stay solvent, treat policyholders fairly, and not take reckless risks with the retirement savings and annuity premiums of ordinary Americans. Instead, Ommen and his staff are co-authoring industry-friendly rules with the very companies they regulate and looking the other way as Wall Street extracts billions from the system at the public’s expense.

The potential conflict of interests could ultimately undermine the National Association of Insurance Commissioners’ credibility as a de facto rulemaking body for the American insurance industry. More importantly, it is a betrayal of the millions of Americans who depend on life insurance and annuities for their financial security.

The Financial Times recently reported on warnings from Ommen about the risks posed by private equity’s growing push into life insurance. He acknowledged that insurers’ balance sheets are becoming harder to understand as they rely more on private credit and offshore reinsurance. If regulators are conceding that the market has outpaced their expertise, the answer should be tougher oversight and stronger consumer protections. Instead, we are seeing something more troubling: regulators who are not merely failing to keep up, but who appear to be actively aligning themselves with the very industry they are meant to oversee.

The Iowa Insurance Division is working with major private equity-backed insurers to develop what its own official, Carrie Mears, has described as rules meant to advance “nationally over time.” Mears also participates in the commissioners association’s Valuation of Securities Task Force, which governs how insurers value the assets on their balance sheets. Co-authoring national valuation standards while simultaneously advising the companies subject to them should raise eyebrows. It is a conflict of interests that should alarm anyone who believes regulators should work for consumers, not Wall Street.

Meanwhile, insurers are loading their balance sheets with investments managed by their own parent companies. For example, Athene continues to invest heavily in Apollo’s own assets, creating circular, self-referential arrangements that benefit the private equity firm while raising serious questions about arm’s-length dealing. Several other life insurers, such as Equitable and Allianz, invest a substantial share of their liabilities in affiliated assets owned by their respective parent companies, raising questions about the prevalence of this practice across the industry. State insurance regulators have the authority to scrutinize these deals and demand transparency. They are not using it.

The problem extends well beyond the insurance balance sheet. The Federal Home Loan Bank system, a roughly $1.3 trillion government-sponsored enterprise created during the Great Depression to support homeownership, has drifted far from its original purpose. According to Bloomberg, private equity-backed insurers have become some of the system’s largest borrowers, with Athene alone carrying over $23 billion in outstanding advances, and major insurers like MetLife not far behind. None of this money is going to housing. These companies are using the system’s implied government guarantee to borrow cheaply and plow the proceeds into private investment strategies that benefit their Wall Street owners. State regulators are letting it happen.

Reform is overdue. The Iowa Insurance Division and the NAIC must strengthen their conflict-of-interests standards and require officials who are simultaneously crafting valuation rules and advising the companies subject to them to step aside. State regulators need to make clear whose side they are on.

Life insurance exists to give ordinary people peace of mind, the confidence that a spouse will be cared for, that a retirement will be funded, and that a promise will be kept. That promise depends entirely on genuinely independent regulators.

When regulators co-author policy with the firms they oversee, bless the asset values those firms report, and stand aside as those same firms game a housing program for profit, they are not regulating. They are colluding. That is not regulatory drift. It is regulatory capture, and its costs will eventually be borne by policyholders who never knew it was happening.

Frederick Haskins was acting Iowa insurance commissioner in 1986. He is a registered lobbyist for Iowa Insurance Associates at the Iowa Legislature.