Insurers have quietly become a major driver of the private credit boom, with numerous private equity shops striking deals with insurance companies or buying them outright. But the entanglement with private credit is also changing the insurance industry itself, raising a number of questions about risk and regulation. Today we speak to Andrew Granato and Pranjal Drall, authors of a new paper, “Private Credit's State Backstop: How Private Equity Socializes Risk Through Insurers," examining the relationship between private credit and insurance. Granato (an assistant professor at the UT Austin Law School) and Drall (JD-PhD student in Financial Economics at Yale) talk to us about how PE got so interested in insurance in the first place, how both sides benefit from the relationship, and why taxpayers might ultimately be on the hook. Chapters: 00:00:00 - Cold Open 00:01:01 - Core Finance Principle 00:03:42 - Private Credit Growth and Risk Migration 00:07:43 - Guest Introduction and PE-Insurance Attraction 00:10:40 - Scale and Transformation of Insurance Portfolios 00:12:25 - Affiliated Assets and Control Structures 00:15:38 - Consumer Market Dynamics 00:19:10 - Private Credit Valuation and Regulatory Oversight 00:22:30 - Insurance vs Banking Backstops 00:27:22 - Insurance Guarantee Fund Mechanics 00:29:51 - Untested System and Structural Problems 00:32:27 - PE Awareness and Permanent Capital Benefits 00:34:51 - Ratings Arbitrage and Competitive Distortions 00:36:01 - Implicit Backstops and Political Dynamics 00:37:43 - Historical Development of State Regulation 00:40:27 - NAIC Structure and Funding 00:41:25 - Correlation Risks: Banks vs Insurance 00:43:11 - Liability-Side Runs and Policy Types 00:45:30 - Shadow Reinsurance and Visibility Loss 00:47:20 - Regulatory Solutions and Reforms Watch Bloomberg Vodcasts: https://www.youtube.com/playlist?list=PLe4PRejZgr0MS0Tqk_zQl1LVVTdWuH2Di Watch more Odd Lots episodes: https://www.youtube.com/playlist?list=PLe4PRejZgr0OJbRzA6nWybYiThLJd_ouz Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets. Join the conversation: discord.gg/oddlots Subscribe to Bloomberg Podcasts: https://bit.ly/BloombergPodcasts Check out more Odd Lots: https://youtube.com/playlist?list=PLe4PRejZgr0MuA6M0zkZyy-99-qc87wKV Get the Odd Lots newsletter: https://www.bloomberg.com/account/newsletters/oddlots And for all things Odd Lots, visit https://www.bloomberg.com/oddlots #Investing #Markets #Finance #Bloomberg #Podcast #OddLots Visit us: https://www.bloomberg.com/podcasts For coverage on news, markets and more: http://www.bloomberg.com/video Visit our other YouTube channels: Bloomberg Television: https://www.youtube.com/@markets Bloomberg Originals: https://www.youtube.com/bloomberg