Private equity firms now control a huge slice of the life insurance and annuity business, and the way they invest that money puts savers at risk.

• Private equity ownership of life insurers went from nothing to more than $700 billion in assets across 134 insurers.
• The problem is not the buying — it is that these firms lend the retirement money to their own deals.
• The same firm picks the loan, judges whether it is any good, collects a fee for making it, and another fee for managing the money that bought it.
• If the borrower fails, the firm has already been paid; the loss lands on the policyholder.
• Anyone holding an annuity has a decent chance of being exposed to this right now.

Outlook: If credit markets crack, losses would flow to policyholders first, then to state guarantee funds and taxpayers.