The Bank of England has expressed concerns about the growing involvement of private equity firms in the insurance sector, citing potential risks to financial market stability.

In its latest Financial Stability Report, the central bank highlighted the trend of private equity firms acquiring life insurers in the US and UK insurers transferring risk to reinsurers backed by private equity. This could potentially lead to disruptive "fire sales" that impact market functioning.

The report emphasizes that private equity-backed firms often seek higher returns through increased risk-taking, including investments in illiquid private assets. This shift in investment strategy may worsen vulnerabilities within the financial system, prompting the Bank of England to call for closer examination of these developments in the insurance industry.