FT称Mark Walter保险资金关联投资风波提示私募信贷与寿险结合模式存在系统性隐患

A ‘democratised’ financial crisis is still a crisis
Billionaire Mark Walter’s brief ownership stints at the Los Angeles Lakers basketball team (he sold his stake this month) and Chelsea Football Club (where he is seeking to sell too) are unlikely to be mourned. But the flak he got from sports fans is nothing compared with the fallout that may be looming in financial markets.
The deals appear to be linked to a dash for cash related to scrutiny of previously hidden “affiliated investments” between different parts of Walter’s business empire. This, though, may prove more than a one-off event in the wider market. Walter was a pioneer in the now fashionable practice of combining private credit asset managers with life insurers. Some regulators rightly seem nervous about sector-wide problems.
When the global financial crisis blew up nearly two decades ago, there were multiple factors that fuelled it. Many stemmed from an inherent bug of banking. Banks borrow most of their money on a short-term basis, from depositors or in the overnight interbank market, and lend it for more extended periods.
Among the many post-crisis regulatory reforms were a clutch that sought to minimise the systemic risk posed by this “duration mismatch”. One of the resulting structural changes in finance was a shift to lending by “shadow banks” such as private capital groups, which raised their funds not from individual depositors but from so-called limited partners such as global sovereign wealth funds and endowments.
The threat of mass losses for individual bank customers, aka voters, had been one of the main triggers for governments across the globe to bail out banks in 2008. Shifting that risk to sophisticated institutional investors was surely wise all round, policymakers reasoned.
And that, for many years, was how private capital operated — until the inevitable course of financial innovation played out. As more and more banks retreated from corporate lending, new models such as Walter’s, which connected large life assurance cash piles with corporates in search of credit, began to catch on. Private capital group Apollo bought life insurer Athene. KKR acquired Global Atlantic. Before long the symbiosis had become mainstream.
It’s easy to see why. For the private capital groups, they had a new and ready flow of money from life insurance premiums to lend out. For policymakers, the model looked less leveraged than traditional bank lending and less likely to put bank deposits at risk.
There are at least three areas of concern, nonetheless.
First, and most obviously, there hasn’t been a major credit cycle downturn since 2008. Jitters have been evident over recent months, with investors sometimes rushing to exit private credit funds. Public bond markets are jittery too and have sold off sharply in recent months. Given geopolitical tension and persistent inflation, a sharp rise in credit defaults feels overdue.
Second, there is a serious design flaw in partnerships between private credit and insurers, at least for insurance policyholders. As private credit groups have shifted away from relying on capital from institutional investors, who expect to exit after a few years, scrutiny of performance and fees has inevitably decreased. In another conflict of interest, insurers may put too much money into private credit, disregarding good-practice asset diversification.
Third, as the term “shadow banking” suggests, data on the sector and any emerging problems is much harder to come by. There is also little transparency about the many sophisticated ways private credit has found to leverage the underlying assets — with much of that borrowing ultimately finding its way back into the banking system.
The fragmented and often underpowered nature of insurance regulation across different US states, and in offshore centres, means the policing of these risks can be weak. In the case of Walter, it is telling that the scale of hidden affiliated trading has been pursued not by the Delaware insurance regulator but by US prosecutors and the SEC.
If the worst happens, and the Walter saga does presage a broader crisis, financiers believe there would be no sudden shock as there was in 2008. It would be a “long-term democratised problem”, as one bank boss put it to me. In other words, the pain would be spread out over the term of decades-long annuities, with losses on soured loans potentially filtering through to millions of annuity owners as lower payouts.
For those who worry about finance’s societal licence to operate over the long term, that’s no less concerning than the taxpayer bailouts of 2008.