Also, Andrew Granato of the University of Texas and Pranjal Drall in a 65 page academic paper take down the private credit/private equity/insurance shell game
Jul 24, 2026
This will indeed be a short thought, because I want the focus to be on this paper, “Private Credit’s State Backstop: How Private Equity Socializes Risk Through Insurers,” written by Andrew Granato and Prangal Drall.
Download📷Private Credit State Backstop Granago Drall July 21 20261.38MB ∙ PDF file
Andrew Granato is a Google Scholar and Assistant Professor at the Univeristy of Texas School of Law. He is on X, handle agranato42. Andrew has B.A. Economics from Stanford. He also posses both a J.D from Yale Law School and a Ph.D in Financial Economics from Yale School of Management.
Prangal Drall is a doctoral fellow at Yale, where is pursuing both a J.D. and a Ph.D as well.
These may be my two favorite people in the world this weekend.
That does not matter too much. What matters is these two gents are qualified to write this paper on a subject that I have been trying to bring to the fore. For instance here,
The Heretic’s Guide to AI’s Stars Part III: Tracepalooza & the Bezzle
Again, the focus is on the paper, “Private Credit’s State Backstop: How Private Equity Socializes Risk Through Insurers.
The table of contents promises great things. They often do.
Exciting stuff, especially those sections III and IV.
I quote from the paper’s abstract.
“Private equity (PE) firms have acquired large life insurers and loaded their balance sheets with private credit assets that are opaque and difficult for regulators to value...when a life insurer becomes insolvent, state-based guaranty funds protect insurance policyholders by "assessing" surviving insurers to cover the shortfall. In most states, such outlays are fully creditable against state premium taxes over time..PE-owned life insurers reflect a structural transformation in which an insurer supports a broader asset-management business that is designed to extract value upfront and impose losses on others. PE firms exploit this regulatory regime by pairing life insurers with private credit to capture value from both sides.
You have heard shades of this from me before, and I have been building to it in Heretic’s Guide Part IV, not yet published.
Let’s start with how it can all end. Page 30 of the paper brings up an important point about the end game, if and when the insurers go insolvent.
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