By Heather Gillers
When Blue Owl executives sold $1.4 billion in private loans last month so that individual investors could cash out of one of its big funds, a slice of the debt suddenly became Doug Ommen's problem.
As Iowa's insurance commissioner, Ommen is arguably the most important regulator for an industry that has become a financial pipeline for the private-credit boom.
More life-insurance money is parked in Iowa than any other state, and a larger share is managed by private equity firms like Apollo and its rivals than anywhere else. It is Ommen's job to make sure those investments are as safe as advertised -- a task with higher stakes than ever as the private-credit sector comes under new pressure.
Ommen is himself responsible for reviewing the investment portfolio of Athene, the world's top seller of annuities -- and a unit of Apollo. And his deputy leads a national task force on how to vet private, hard-to-value assets.
"We are oftentimes in the middle of a lot of these changes that are taking place," Ommen said.
This marriage between insurers and private assets is entering a critical stage. Retail investors have yanked their money from several major private-credit funds. Deep-pocketed pensions and endowments are scrutinizing their private debt holdings, too, worried in part about the funds' exposure to software companies that could be hurt by the artificial-intelligence boom. Private debt managers say their investments are doing well and that the redemptions are an overreaction to a handful of blowups in the wider credit markets.
Ommen and other state commissioners stand watch at the nexus between those same private deals and a third source of investment dollars: Americans who buy life insurance policies and annuities.
Life and annuity companies hold close to a trillion dollars worth of private debt, about a quarter of their total fixed-income holdings, according to ratings firm A.M. Best. Some of it is at least as risky as the private-debt funds retail investors have been fleeing. About $280 billion in life insurers' private credit carries the lowest investment grade rating, according to Moody's Ratings, and $70 billion is speculative grade or "junk." A Federal Reserve study dubbed insurers "the new shadow banks."
Unlike banks, however, insurance is regulated at the state level. That means state insurance departments that oversee home and health policies are now vetting some of the nation's most complex financial products. States follow nationwide standards set by an industry group, but state lawmakers have broad discretion and commissioners can bend state law for individual companies.
Ommen said he and other commissioners are well-equipped to handle the challenge of policing private assets, particularly in conjunction with the industry group, the National Association of Insurance Commissioners. That group is governed by commissioners -- in addition to their full-time jobs -- and has more than 500 staffers in Kansas City, Mo., New York and Washington.
"The states have done an incredibly good job at monitoring" insurers' investments in private assets, Ommen said.
States say the decentralized approach enables them to be responsive to their communities. It also allows insurers to play states against each other. Iowa's less-burdensome capital requirements for indexed annuities helped draw insurer Symetra, which cited "state-of-the-art statutes and regulations" when it moved from Seattle in 2014.
Private-equity firms control about 20% of annuity reserves -- money held to pay future claims -- up from 2% in 2011, according to A.M. Best. During a decade of ultralow bond rates, private-equity-controlled insurers surged ahead of traditional firms by investing policyholder premiums in higher risk private credit. Other insurers followed. In the first half of 2025, a quarter of insurers' purchases were hard-to-trade, hard-to-value private investments, Moody's found.
The NAIC said it is "proactively adapting to protect life and annuity policyholders." The American Council of Life Insurers, an industry lobby, said it "supports the NAIC's efforts to enhance insurance regulatory oversight."
Private equity's gradual roll-up of the Iowa life-insurance industry was just getting started in 2013 when the Iowa Insurance Division hired Ommen, a career civil servant who had previously served as Missouri's top insurance regulator and who likes to spend weekends fishing with his seven grandchildren. The governor appointed him commissioner in 2017.
During the pandemic, private credit surged. Iowa was increasingly getting calls from other state commissioners wanting to compare notes. "You could see what was evolving," Ommen said. Between 2014 and 2025 the division's investment oversight staff grew from 34 to 47.
One of Ommen's early hires was Carrie Mears, the Iowa insurance division's first chief investment specialist. Her job responsibilities include helping evaluate a particularly thorny type of investment ubiquitous under private equity: assets insurers buy from investment managers that own or partially control them.
These so-called affiliated investments now amount to an average 76% of surplus, the cushion left over after liabilities are subtracted from assets, A.M. Best found. Last year Utah's insurance commissioner flagged such holdings as a key culprit in the financial problems of a troubled private-equity owned insurer there.
"What we have to think about with a lot of these affiliations in place is trying to make sure that these arm's-length assessments are still happening," Mears said.
Iowa typically requires a signoff from Ommen when insurers buy investments from an affiliated company that amount to 3% or more of the insurers' total holdings.
That wasn't necessary with the Blue Owl sale. Last month, faced with big withdrawal requests, Blue Owl struck a deal to sell a batch of private loans at a slight discount to a group of pensions and insurers. One of them was Kuvare, which has hired Blue Owl to manage the holdings of its suite of insurance companies, including an Iowa-based insurer.
Because Blue Owl doesn't control Kuvare -- it just manages its money -- the deal wasn't considered "affiliated."
Write to Heather Gillers at heather.gillers@wsj.com
(END) Dow Jones Newswires
March 20, 2026 10:52 ET (14:52 GMT)
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