Big deals have brought together major investment managers with large insurance firms. Do they represent continuity or transformation for alternative investors?
John Caccia, Partner, Skadden, Arps, Slate, Meagher & Flom
John Caccia is a Partner, Investment Management, at Skadden. He represents sponsors and investor clients in the formation and capitalization of a broad range of US and offshore private funds, and related investment management platform transactions, including financing, acquisitions, and dispositions. He’s based in New York.
Skadden, Arps, Slate, Meagher & Flom is a global law firm with 1,700 lawyers in 21 offices across 50-plus disciplines. Skadden’s Investment Management Group provides its clients with comprehensive guidance and innovative solutions on local, cross-border, and global matters.
Shaun Beaney, Editor of Preqin First Close, asked John why private capital firms have been converging with insurance firms, the challenges these deals create, and if there’s a pipeline for the future.
How is the relationship between the insurance industry and private capital changing?
A significant number of sizable transactions have been consummated between some of the largest investment management firms and insurance entities, particularly in the US. These deals often involve substantial assets under management, targeting long-term benefits.
A factor in the background of these deals is a pronounced trend in lending, as banks do less origination and non-bank financial intermediaries expand their activities in private credit. This trend developed alongside the related rise in the scale of private capital markets and the alternatives industry. Growth in private credit reflects the appeal of cash-flowing, risk-adjusted assets for all types of investors, especially – and I think this is important for insurance entities – when private credit positions bring the advantage of seniority in the capital stack.
Another consideration is the ongoing focus among managers on permanent capital and the benefits for investment teams of having permanent capital. Investment teams – whether inside insurance companies, investment managers, or at LPs – often regard having a permanent capital source as a powerful enabler, bringing positives that compare favourably to limited life fund structures. It affords relative certainty of capital, even in more difficult phases of the economic cycle.
When it comes to doing deals, the proprietary sourcing and relationships that are critical for private assets can be strengthened if there’s mutual certainty that the assets can be bought across different cycles, even when conditions aren’t looking so rosy.
A related factor I would note is the growing recognition and use of structures that link up insurance and investment management, like rated-note feeders and sidecars, which accelerate access for insurance capital to private capital opportunities.
What was the traditional relationship?
The traditional relationship was one of many touchpoints and parallels, which I see in three main groupings.
First is the presence of deep experience within both insurance groups and private capital teams, including in private credit.
The second is the insurance-firm provenance of some of the leading private capital teams and groups, not only in the US but also in Europe. There’s a lot of history there that links the two communities.
And third: similar patterns of how different types of capital, including house capital, affiliated capital, and third-party capital, invest alongside each other. Insurance and private capital teams often share outlooks on the unique role that permanent and quasi-permanent capital can play in structuring deals that involve different capital sources, including third-party investors.
Investing the float, which is a term used for investing capital derived from premiums, has helped foster the development of a range of key characteristics of insurance firms that are relevant to alternatives, including expertise of in-house investment teams and the development of important deal sourcing channels.
Insurance company general accounts are important for many private capital transactions, which influence how deals get sourced, structured, and closed.
What does the convergence with insurance mean for the future of alternative investments? Does it change regulatory risks, for example?
My view is that the increased connectivity between alternative managers and insurance is as much about continuity as it is about change in the core business model.
The requirements for compliant allocation policies and conflicts management policies, for example, are well developed in many segments of the alternatives industry, such as large, cross-border multi-strategy firms. While we can and should conceive of insurance platforms as special, they often give rise to questions that are amenable to fairly traditional conflicts management, conflicts mitigation, and compliance solutions concerning governance, decision-making, independence, and autonomy requirements.
As legal advisors, we include in our analysis a principle-based approach to legal norms, which requires attention to the presence of policies and procedures that are designed for compliance with law.
Two important aspects of these transactions that allow us to see similarities between insurance platforms and investment managers are: how policies and procedures evolve, and the evolution of governance arrangements.
For example, the protocols relating to separateness, autonomy of decision-making, information management, and record keeping evolve considerably as platforms evolve in convergence. Those protocols are also certainly points of attention in many multi-strategy managers that are unconnected to insurance firms. At the same time, many novel questions arise when it comes to insurance and investment management structures.
How does Skadden get involved in these situations?
We’re involved right from day one in designing these structures and comparing how different structures might help with business objectives.
Permanent capital structures are particularly important for asset management founders, as well as the organizations themselves. These structures can affect how sponsors address high-level questions about exits, liquidity, and intergenerational ownership, all the way to more granular matters of day-to-day compliance, governance, and operational matters.
In designing these structures, advisers and sponsors tend to distinguish the risk associated with the execution of the convergent transaction from operational risks once a structure is created.
In the US, convergent structures that involve insurance and investment management attract the application of several investment management regulatory regimes, such as the United States Investment Advisers Act and relevant insurance laws at the state level. They may also be subject to a range of other regimes, including broker-dealer, loan origination, and lending laws. In many cases, market practice allows us to point to proven and established frameworks that can handle many of the questions that arise for these types of transactions.
A number of these transactions have been successfully operational for many years. The policy perspective really is fairly intuitive in most jurisdictions.
Do you see a continuous pipeline of these convergent transactions?
We see continued attention to the benefits of how these structures work for insurance companies, the reinsurance market, and investment managers.
The success of transactions to date speaks to the desire of managers to successfully implement permanent capital structures and to look at how large LPs are viewing insurance structures and insurance-related credit management. There is certainly room for more transactions.
Shaun Beaney is Editor of Preqin First Close. It’s quick, easy, and free to subscribe here.
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Special thanks to Stephan Capriles at Skadden, as well as Gregory Lingaas and Anna Kisseleva at BlackRock.
The views expressed are the opinions of Skadden, Arps, Slate, Meagher & Flom, provided as of July 2025. They do not constitute an endorsement, recommendation, or any other advice, and are subject to change. The content does not necessarily express the views of BlackRock, Preqin, or any of their affiliates. Skadden, Arps, Slate, Meagher & Flom is not affiliated with Preqin.