The largest Wall Street private equity firms like Blackstone, KKR, Carlyle, Apollo, Arres, CVC etc. now control 700 billion USDs in life insurance assets. The Wall Street take over of large part of the life insurance business, makes life insurance assets interwoven in the global financial markets fabric.
Life insurance companies in search of higher yielding assets often invest not a negligible part of their portfolios in Collateralized Loan Obligations, CLOs the underlying loans of which have been disbursed to higher risk borrowers in technology and other sectors often commanding interest rates of more than 10 %, according to Wolfteam Ltd.'s projections and estimates.
Many of these CLOs are also bought by the private equity arms of Blackstone, KKR, Carlyle, Apollo, Arres, CVC etc., which also on the other side disburse high yielding loans to risky borrowers in technology and other sectors thus commanding high interest rates of more than 10 %.
This kind of investments benefit the economy by supporting the technology companies which develop the AI infrastructure and thus drive the US GDP growth lately. The last figures show that large percentile of the US GDP growth is due to artificial intelligence, AI related investments.
On the other hand, however insurance being interwoven in the fabric of the economy means problems in one corner of the market or company could quickly spread and bring about a worldwide recession.
For now, however the largest Wall Street private equity firms like Blackstone, KKR, Carlyle, Apollo, Arres, CVC etc. investments seem to be paying off by yielding high rates of return, which are plowed back to the pension funds and endowments which provide large part of the privater equity firms' assets under management.
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