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Absolutely appalling behavior. The exposure is small, but it is - quite literally - socializing their credit losses.

$1T in exposure is not large - but an implosion would mean a 8-14% haircut on life insurance policies. The reality would likely be far worse. Mutual companies (owned by their policy-holders) would be unaffected, while some corporate policy holders may in fact get nothing when they expected multi-hundred thousand or multi-million dollar payouts in a tragedy.

Given the size of liabilities, some states or municipalities could go bankrupt or at least have to cut public services.

People wonder why everyone hates PE.

Source: At the end of 2024, there were 139 life insurers directly owned by PE firms that collectively held about $700 billion in assets, as well as another $300 billion in life insurers held as portfolio companies within PE funds. 169 While exact numbers differ by study, directly-PE-owned life insurers alone represent at least 8% of life-insurance-industry assets, 170 and other studies put the 2024 figure at around 14% of life insurer general-account assets.