Excel Download: Security Benefit Likely Needs Asset-Level Transactions to Implement Collateral Loan Reduction Plan; Portfolio Supported by Key Valuable Assets

Relevant Items:
Company Analysis Page, including:

SBL Holdings Investor Relations Page
NAIC Accounting Practices and Procedures Manual (2026)
 

• Security Benefit, Eldridge Industries’ primary insurance affiliate, is the most active user of collateral loans in the U.S. life insurance industry, accounting for nearly half of the total collateral loan market as of December 2025, according to our calculations. Collateral loans are a structure unique to the insurance market, effectively allowing insurers to privately securitize a wide variety of assets, including ones owned by affiliated entities, in an unrated structure that currently carries a uniform 6.8% risk-based capital charge. Eldridge Industries has relied on collateral loans from Security Benefit to fund a meaningful portion of its private equity and real estate investments.
   
• The National Association of Insurance Commissioners recently adopted new rules, scheduled to go into effect at the end of 2027, which would replace the uniform 6.8% charge for collateral loans with a grid-based charge dependent on the asset underlying the specific collateral loan and the collateral loan’s attachment point. This change will result in a significant increase in Security Benefit’s capital requirements, with the company planning to reduce its $14.3 billion collateral loan portfolio by approximately $5 billion.
   
• In our view, asset-level transactions, in the form of recapitalizations or outright sales of the stakes underlying the collateral loans, are the “path of least resistance” for the company, as risk transfers involve mark-to-market risk while alternative structures may involve other regulatory hurdles.
   
• Although Security Benefit provides full transparency into its collateral loan borrowers and Eldridge highlights many of its investments publicly, matching the two is an inherently complicated exercise. We provide clients with an org chart highlighting the location of certain collateral loan borrower groups and key portfolio companies, and a separate downloadable Excel sheet showing all 2,000-plus disclosed Security Benefit affiliates, including the individual 113 collateral loan borrowers. Both are available on the company analysis page HERE.

Eldridge Industries LLC is a diversified holding company controlled by Todd Boehly, the former president of Guggenheim Partners. Eldridge started with a collection of media-related assets spun off from Guggenheim as part of Boehly’s amicable departure from the firm in 2015. After its recent reorganization, Eldridge Industries LLC currently owns a large portfolio of private and public assets, discussed in more detail below, as well as Eldridge LLC, an asset management business.

Eldridge LLC, in turn, owns Eldridge Capital Management LLC, a fee-based asset management company, and Eldridge Wealth Solutions, a holding company for Eldridge’s insurance assets, including Security Benefit. Eldridge LLC’s website lists total assets under management for the firm at $75 billion. After a recent internal reorganization, Eldridge Credit Advisers LLC, a subsidiary of Eldridge Capital Management, became the overall investment manager for Security Benefit’s general account.
 

Security Benefit Life Insurance Co., or SBLIC, is a 135-year-old Kansas-based life insurance company, focused on issuing variable annuities, which it has been doing since 1970. The firm was purchased by a Guggenheim-led investor group in July 2010, with Boehly stepping in as chairman. Eldridge acquired the business from Guggenheim in 2017. SBLIC has grown its asset book to $66.8 billion as of June 30, 2026, from $12.8 billion at the time of its acquisition by Guggenheim. SBLIC had a statutory surplus of $7.3 billion at the end of the second quarter, including $100 million of surplus notes.

SBLIC is 100% owned by SBL Holdings, Inc., or SBLH, a subsidiary of Eldridge Wealth Solutions. SBLH also owns two smaller insurers, Everly Holdings and First Security Benefit Life Insurance and Annuity Co. of NY, as well as a number of other insurance-related businesses. SBLIC accounts for a significant majority of SBLH’s assets and the overwhelming majority of its investment capital.

SBLH is the issuer of three series of senior notes due 2028, 2031 and 2034 as well as two series of preferred stock. SBLH is also a borrower on a $1 billion revolver due 2027, which had $550 million outstanding as of June 30.
 

SBLIC is rated A- by each of Fitch Ratings, S&P Global Ratings and AM Best and A at Morningstar DBRS. SBLH holds issuer ratings of BBB- from S&P, BBB at Fitch and BBB (high) at Morningstar DBRS. In August, Fitch affirmed its ratings for the complex but revised the outlook to negative, citing the reassessment of the company’s collateral loan portfolio. Its senior notes have been fairly volatile since issue and have traded wide to their BBB rating.

The most recent spike in spreads appears to have been driven by the Fitch outlook revision as well as the market’s fears of contagion from the ongoing TWG / Guggenheim situation, while the spring spike in spreads coincided with headlines about the National Association of Insurance Commissioners, or NAIC, taking a tougher stance on private assets.

A collateral loan is a concept that arises from the NAIC’s SSAP No. 21, which addresses “other admitted assets.” The standard defines collateral loans as “unconditional obligations for the payment of money secured by a pledge of a qualifying investment.” According to the minutes of NAIC’s life risk-based capital working group, collateral loans are “not securities, not rated by a [rating agency], and not designated by the Securities Valuation Office.” The main requirement for the collateral supporting such loans is that it has to consist of assets that could otherwise be “admitted” under NAIC’s SSAP No. 4, which itself prescribes a fairly broad standard for admissibility.

Prior to 2024, all collateral loans were subject to a fixed capital charge of 6.8%, which falls between NAIC Categories 3C (Ba3/BB- equivalent, subject to a 6.017% charge) and 4A (B1 / B+ equivalent, 7.386% charge). For comparison, NAIC prescribes the following capital charges for certain other assets insurers are required to disclose on their filed Schedule BA:
 

• 22.5% to 45% for common stocks, depending on beta,
   
• 30% for unaffiliated LP interests and fund investments,
   
• 30% for other unrated fixed income, and
   
• 13% for real estate.

Because these types of assets are admissible under SSAP No. 4, they can all serve as “collateral” for collateral loans under SSAP No. 21, meaning the use of collateral loans could materially reduce capital requirements as long as there was some junior capital below the loan. In other words, what is effectively a margin loan against a private equity co-investment, which should have a capital charge of 30%, could “only” require a 6.8% capital charge, even at a relatively high loan-to-value, or LTV.

We would note that the 6.8% capital charge is still relatively high – more than triple the 2.168% charge for Category 2C assets, equivalent to securities rated Baa3/BBB-. As a result, the insurance industry has generally relied on private letter ratings for private credit-type investments, a separate area of recent regulatory scrutiny. In fact, SBLIC appears to be a singularly heavy user of the collateral loan structure.

According to a recent NAIC report, the U.S. life insurance industry held approximately $28.5 billion in collateral loans as of Dec. 31, 2025. SBLIC accounted for approximately $14 billion, or 49.1%, of this total. The concentration is even more meaningful when looking at affiliated collateral loans: According to a 2025 Moody’s report, SBLIC accounted for approximately 83% of the industry’s affiliated collateral loan exposure as of year-end 2024 ($12.8 billion out of $15.4 billion), with Brookfield coming in a distant second at 9% ($1.4 billion).

We believe the economic case for using the unrated collateral loan structure in lieu of one involving a private letter rating rests on a combination of (1) higher potential absolute returns at the loan level, (2) the flexibility of the structure and (3) the ability to use it to fund affiliated investments and potentially increase the overall return on equity for the sponsor, assuming the sponsor owns both the insurer and the investment.

The latter is the most important factor, in our view: All else equal, a 60% to 80% LTV, 6.75% coupon collateral loan on a private equity investment can take the total equity return to 40% to 73% from 20%. The math holds up even if we add a highly simplified capital charge to account for the required insurer equity, as shown below:
 

NAIC Revisions to Collateral Loan Regulatory Capital

On June 11, the NAIC adopted revisions replacing the uniform 6.8% charge on all collateral loans with a framework that bases the capital charge on the underlying collateral and the loan LTV, as well as the presence of independent value verification. The new framework will go into effect on Dec. 31, 2027. The changes amount to a significant increase in the regulatory-based capital, or RBC, charge for loans backed by equity interests as well as securitization residuals, as shown in the chart below, reproduced from SBLH’s second-quarter MD&A report. The left-most column is the overcollateralization category, effectively an inverse of LTV.
 

As an example, under the new framework, a 75% LTV collateral loan backed by independently verified private equity interests would see its RBC charge more than triple to 24% from 6.8%. The 24% is calculated by starting with a 30% “base” RBC level for LP interests, reduced by a 20% haircut to account for its LTV band. Under this framework, the lowest possible RBC charge for such interests is 15%, more than double the 6.8% base level.
 

As of June 30, SBLIC’s affiliated collateral loan portfolio was approximately $14.3 billion, or 24% of its admitted assets ex-separate accounts, an increase of nearly $1.1 billion from year-end. We would further note, the collateral loan portfolio has over 270 loans across 113 borrowers.

SBLIC discloses its full collateral loan portfolio on its annual schedule BA, as required, and discloses subsequent additions and disposals quarterly. The portfolio is further split into an affiliated and unaffiliated section, with the former comprising the vast majority of SBLIC’s collateral loan book. The information disclosed for each collateral loan generally includes its carrying value, the borrower name, the interest rate, maturity date and the date of acquisition.

Schedule BA does not provide meaningful identifying information for each borrower, nor does it address other key loan characteristics, such as LTV or cross-guarantees, if any. However, SBLIC separately discloses the ownership structure for its entire holding company system on Schedule Y, listing in-group ownership details for over 2,100 entities in the broader SBLH / Eldridge structure. By cross-referencing Schedule BA with Schedule Y, as well as Eldridge’s publicly disclosed investments and a comprehensive search of public records, we were able to trace a significant number of specific assets to specific borrowers. We also incorporated some information about SBLIC’s short-term affiliated loan book, though this is not the primary focus of our analysis.

We used this information to build a full org chart for Eldridge and its affiliates, and we are publishing select excerpts from this chart alongside this piece. We also provide clients the full list of subsidiaries, disclosed collateral loans (including estimated amounts as of June 30) and short-term loans. Both are available on the company analysis page HERE.

The high-level summary of main collateral loan and short-term loan “nodes” within the broader Eldridge complex is shown below:
 

It is important to note that this exercise is inherently limited by the quality and completeness of the company’s disclosures, the practical difficulty of cross-checking the results of a massive optical character recognition exercise, as well as the fact that in some cases we relied on naming conventions rather than specific evidence to trace certain assets. Put another way, just because an entity owns something called XYZ Holdings and we separately know that Eldridge is an investor in a company called XYZ, it does not necessarily follow that XYZ Holdings in fact holds all, or any, of Eldridge’s XYZ stake, or that XYZ is the only thing that it owns. However, we believe that it provides a useful illustration of both the structural complexity, and the high-level dollar exposure to certain key assets.

Separately, SBLH discloses certain high-level information for its aggregate collateral loan portfolio in its expansive quarterly presentations, where it generally refers to its collateral loan book as “unrated ABS.” This information includes collateral type and loan attachment points (effectively, the inverse of an LTV), shown below, as well as GICS and maturity breakdown. The company also states that the weighted average LTV of the portfolio is 69% and that 80.7% of the company’s collateral loans benefited from additional credit support such as cross-collateralization and guarantees by certain parent entities.
 

Impact of New NAIC RBC Rules on Security Benefit

According to SBLH, based on a preliminary analysis, the new NAIC rules would require reductions of approximately 30% to 40% of the collateral loan book to maintain an RBC ratio of “at least 400%,” which would be down from 424% at 2025 year-end. On the call to discuss its second-quarter results, SBLH’s management team pegged the quantum of required divestment at approximately $5 billion, which would be approximately 35% of the collateral loan book, and also confirmed that the 400% RBC ratio is the new target level.

By comparison, the “organic” 2026-27 maturity wall for the collateral loan portfolio is approximately $1.9 billion, in our estimation, requiring at least $3 billion of “inorganic” reduction, assuming all scheduled maturities can be paid off with funds external to the insurer. The company did not disclose what its RBC would be under the new regime without a divestment when asked.
 

It is difficult to translate the impact from the increased RBC charge for a specific asset type into the increase in consolidated RBC requirements for a specific insurance company. This is because the RBC formula is a complex, nonlinear multivariate calculation, with the asset-specific RBC factor included within the radicand of the formula along with other variables that are difficult to estimate from the outside. Put another way, SBLIC’s RBC calculation likely includes some diversification benefits, and the impact of higher asset-type-specific RBC charges on its overall RBC is likely to have less than a 1:1 relationship.

Mitigation Measures

In its second-quarter MD&A report, the company outlines three major strategies for collateral loan portfolio reduction, including:
 

• Repositioning of assets underlying the collateral loans into different structures with more favorable RBC charges,
   
• Risk transfers and reinsurance, and
   
• Asset-level transactions, including “distributions, repayments, recapitalizations and corporate transactions.”

On the second-quarter earnings call, Boehly noted that he expected to have a large “personal liquidity” event, hinting at potential equity support as part of the collateral loan reduction initiative. Subsequently, Chelsea FC, part-owned and chaired by Boehly, announced that Clearlake Capital would buy out Boehly’s stake as well as Guggenheim CEO Mark Walter’s. According to the Financial Times, Boehly and Walter are expected to receive £950 million in cash for their combined 25% holding, resulting in “a small gain” on their investment. Boehly also has a personal ownership stake in the LA Lakers, as we previously discussed.

We believe that, of the three main strategies outlined by the company, asset-level transactions would likely be the path of least resistance.

We think of risk transfers and reinsurance in this context as functionally similar to a partial sale: an insurer cedes a portion of both assets (investments) and liabilities (reserves) to a third party (reinsurer). The transaction definitionally involves a repricing of both sides of the transaction. We believe that the market-clearing yield for SBLIC’s collateral loan portfolio may be higher than what the current mark would imply.

As shown below, we have coupon and maturity information for approximately $12.3 billion of Security Benefit’s collateral loan portfolio, as the quarterly disclosures do not list this information for new additions. This part of the portfolio has a weighted average coupon of 7.56%, a weighted average tenor of just under three years as of June 30 and an estimated weighted average spread of 373 bps, which we calculated by comparing the coupon to the five-year Treasury rate on each loan’s issuance date. Simply keeping the spread flat for each loan and accounting for the higher current Treasury rate would result in a $265 million mark-to-market loss on the portfolio, all else equal.

We also believe that a third party may price the credit risk of what are effectively private equity margin loans differently. For example, SoftBank recently priced over $11 billion of bonds at spreads ranging from 363 bps to 467 bps. These bonds, while unsecured, were structurally similar to SBLIC’s collateral loan portfolio as their primary credit support came from SoftBank’s investment portfolio, both public and private. The bonds were marketed off of an LTV of approximately 13%, while our own analysis pegged the figure closer to 25%. Notably, the largest asset in SoftBank’s book is its publicly traded chip designer, ARM Holdings.

We would also point to VICI’s recent investment in a prominent Eldridge property, One Beverly Hills, discussed in more detail below. VICI has committed to invest a total of $450 million of mezzanine debt into the property at SOFR+800 bps, materially higher than the 7.5% average coupon for Security Benefit’s collateral loans, even though VICI’s investment appears to be senior to Eldridge’s equity in the project, which backs the collateral loans. Although VICI is exposed to single-asset risk, it appears to have received corporate guarantees for its loan from other Eldridge entities, including Eldridge Wealth Solutions.

Assuming the “fair” spread for SBLIC’s collateral loan portfolio is closer to or higher than that paid by SoftBank, the mark-to-market impact on the portfolio could be between approximately $400 million and approximately $1 billion, depending on the level used. For context, as of Dec. 31, SBLIC had a total asset valuation reserve of $1.1 billion, of which $543 million was attributed to credit risk.
 

Asset repositioning would likely involve repackaging the assets pledged under the unrated collateral loans into a rated wrapper, such as a collateralized fund obligation or a rated note feeder. Although both are used by the industry at increasing rates, with some having LTVs in a similar range to Eldridge’s collateral loan portfolio, most of the large structures we have encountered involve either credit-focused portfolios (such as Apollo’s AMAPS structures) or highly diversified private equity secondaries. SBLIC’s collateral loan book, in contrast, is backed by an existing portfolio of assets, with a number of larger holdings likely accounting for a disproportionate share of total value.

These structures also appear to be attracting scrutiny of their own from the NAIC. As it stands, bond instruments backed by equity interests already have a “rebuttable presumption” that they do not constitute a creditor relationship in substance, meaning the insurer has to perform a detailed analysis to refute this presumption. An NAIC working group recently recommended that the scope of assets that would be subject to such a rebuttable presumption be expanded. Separately, many such structures have relied on private letter ratings, another area of recent NAIC scrutiny.

Asset sales or asset-level recapitalizations, on the other hand, do not necessarily require optimization for the current regulatory landscape or a reinsurer’s pricing of risk. Given the size and prominence of certain positions, we believe that a few well-executed sales can go a long way toward reducing SBLIC’s collateral loan book to a compliant level by the end of next year. However, it does subject Eldridge (or another affiliated equity holder) to meaningful execution risk and potentially puts it in the position of a forced seller.
 

On the second-quarter call, Todd Boehly highlighted a number of specific investments supporting Security Benefit’s collateral loan book. We have separately attempted to identify certain large or otherwise prominent holdings supporting SBLIC’s collateral loan portfolio. We highlight a small number of specific, likely highly valuable investments that could potentially anchor one or more asset-level transactions, in our view. For each investment highlighted below, we show our best understanding of the ownership structure, highlight the specific collateral loan borrowers exposed to it, the quantum of loans exposed and high-level valuation comments, if any are available. All in, we traced ownership of approximately 100 portfolio companies in our research, and we plan to publish more detail for clients at a later date. As always, we are happy to discuss our findings with interested subscribers.

While the investments we are highlighting here appear to have been successful for Eldridge and thus Security Benefit, we should note that, like with any diversified private investment portfolio, not every Eldridge investment has worked out. Vivid Seats is deeply distressed and has seen its market capitalization collapse from over $2.5 billion to $33 million; Prescient Co., a 2021-vintage investment, appears to have largely shut down; and CILS1, a U.K. warehouse operator, has “going concern” language in its 2025 statutory financials. Given the relative amounts involved, the valuation of the “winners” appears to have significantly more impact on Eldridge’s ability to shrink its collateral loan book than the impact of any write-downs on the “losers.”

FlexJet Complex

FlexJet is a private aviation provider founded in 1995, focused on providing fractional jet ownership. The company directly competes with Berkshire Hathaway’s NetJets business and, less directly, with WheelsUp and VistaJet, both of which employ a membership-focused model instead. Eldridge affiliates own approximately 31% of FlexJet and slightly higher shares of two affiliated businesses, Tuvoli and 4Air, that were distributed out of FlexJet in 2022 as part of an aborted de-special purpose acquisition company, or de-SPAC, transaction with a Boehly-affiliated vehicle. The de-SPAC would have valued FlexJet at approximately $3.1 billion.

FlexJet’s most recently announced funding round included an investment of $800 million from affiliates of L. Catterton, KSL and J. Safra. According to at least one news report, the investment valued the firm at $4 billion, which would nominally imply a $1.24 billion value for Eldridge’s 31% stake. However, an S&P ratings update following the investment notes that the money came in as a new Series E nonconvertible preferred equity, with use of proceeds funding capex, $200 million of dividends and $300 million of debt repayments.

FlexJet’s B+ rated senior unsecured notes are currently trading in the 103 context, yielding just over 7.6%.

Ownership Structure

Collateral Loan Exposure

FlexJet, Lenticular Energy (4Air) and Tuvoli entities appear to support 10 separate borrowing entities, which collectively have $1.4 billion in collateral loans and $145 million in affiliated short-term loans (the former as of June 30, the latter as of Dec. 31). Many of the CL borrower entities also look to other Eldridge Portfolio companies for credit support. As noted above, the exposures shown below also do not account for any cross-collateralization or guarantees that these loans may have.
 

One Beverly Hills

One Beverly Hills, or OBH, is a 17.5-acre luxury mixed-use redevelopment project centered on the historic Beverly Hills Hilton, sponsored by Eldridge and its affiliate Cain International. Once complete, the project will include two hotels, residential towers, luxury retail space and a botanical garden.

In March 2026, VICI Properties announced a significant upsize of a previous $450 million loan to OBH, committing to provide a total of $1.5 billion in mezzanine financing, which would rank behind a $2.8 billion senior loan commitment led by JPMorgan. According to Citi Research, the new mezzanine loan carries an S+800 coupon. Notably, VICI’s loan is to OBH HoldCo LLC and is guaranteed by Eldridge Wealth Solutions and Cain International.

Ownership Structure

It appears that Eldridge owns its interest in OBH both through an indirect interest in OBH HoldCo LLC, the VICI borrower, held largely via Cain, as well as two other entities ultimately owned by Eldridge Wealth Solutions. It is unclear from the public filings how the actual project economics are divided between the entities.
 

Collateral Loan Exposure

The bulk of SBLIC’s $1.9 billion collateral loan exposure to OBH seems to be via five Eldridge Wealth Solutions-owned trusts, which each hold 20% of OBH PE Investor LLC and have $225 million of collateral loan obligations owed to SBLIC. The OBH HoldCo entity (the VICI borrower) is owned via a complex chain that includes a number of other collateral loan entities, including Cain International ($315 million in collateral loans) and Wanamaker ($238 million in collateral loans). Most of the OBH HoldCo-side collateral loan borrowers appear to have significant other assets.
 

A24 Films

A24 Films is a high-profile independent film and television studio, founded in 2012, with Eldridge, then part of the Guggenheim complex, as the lead investor at inception. A24 was reportedly valued at $3.5 billion as of mid-2024, based on a Thrive-led funding round. Google’s DeepMind recently invested $75 million in the business, which, according to Boehly’s comments on the second-quarter call, was at a valuation of over $4.5 billion. Illustrative valuation of the stake held by Eldridge Media Holdings at the $3.5 billion valuation is approximately $1.12 billion.

Ownership Structure

A24 Films LLC is 32% owned by a subsidiary of Eldridge Media Holdings LLC, which is a borrower under a $296 million collateral loan. Eldridge Media Holdings is, in turn, 58.7% owned by GEC Finance, another collateral loan borrower. Eldridge Media Holdings owns a large number of other portfolio companies, including various Penske Media entities.
 

Collateral Loan Exposure

We identified two collateral loan borrowers, who together have $437 million of loans outstanding, with direct exposure to A24. There are other collateral loan borrowers within the Eldridge Media Holdings chain, who collectively have $604 million of collateral loans outstanding.
 

Music Rights

According to press reports, Eldridge has invested in a number of music rights transactions, including those covering portions of the music catalogs of The Killers and Bruce Springsteen, partnering with Sony Music Group on the latter.

The Springsteen transactions were reportedly valued at $550 million at the time of their acquisition in 2021, though the economic split between Sony and Eldridge is unclear to us. These deals were struck in a low-interest-rate environment, meaning that, all else equal, the discount rates on these transactions have likely since increased. However, the impact of higher rates on valuation could be partially – or even more than fully – offset by an increase in the underlying earnings stream. Eldridge President Tony Minella recently stated that the “cash flow” from the Springsteen catalog increased to $17 million from $7 million at the time of the deal commencement, without specifying the exact cash flow measure discussed or its periodicity.

Ownership Structure

The rights to these two artists’ music catalog appear to be held through Asbury Boss LLC and Somebody Told Me LLC, both owned by Eldridge IP Holdings LLC. The latter, in turn, is owned by three collateral loan borrowers, in different proportions, with aggregate collateral loan exposure of approximately $100 million.

(It is this writer’s firm opinion that “Somebody Told Me” is a much better Killers song than “Mr. Brightside,” so the decision to use it as the name for the royalty vehicle is commendable.)
 

Collateral Loan Exposure