KKR, Apollo Tap $5.8 Trillion in Japan Life Insurance for Assets

Wall Street is mining a new treasure trove of assets: The savings built up in Japanese life insurance. Companies controlled by KKR & Co., Apollo Global Management Inc. and other giant investors are doing deals to manage billions of dollars backing life and annuity policies. In an arrangement known as reinsurance, the Japanese insurers are reducing their risk by transferring some of their liabilities for future benefits to the money managers’ insurance units.

The original insurers remain responsible for managing and paying the policies. But in return for helping to shoulder the financial obligation, the money managers receive a chunk of assets from the insurers. They’re betting they can invest that cash to generate more than what they’ll ultimately have to pay out to support retirement and death benefits under the policies. Much of the money is flowing into the hot investment of the moment: higher-­yielding private credit.