Apollo CEO Rowan warns of market correction, slams rival insurers

Apollo Global Management CEO Marc Rowan warned investors Wednesday that he was preparing his asset management giant for a possible market downturn and sharply criticized what he called “egregious” practices by some rival insurers.

The current strong economic environment – ​​which helped Apollo post a record quarter, in which the company reached $1 trillion in assets under management and record fee profits – masks a growing risk of what he called “outside the box” shocks.

“Everything we see in front of us is actually quite strong,” Rowan said. But there are “in our opinion a much greater chance of obtaining offside results”.

Rowan, who co-founded Apollo in 1990 and oversaw its transformation into an alternative assets and insurance giant, said he was now more concerned about outside factors derailing the economy than at any time in his four decades on Wall Street.

His comments, which come as the U.S. stock market trades at record highs, add to concerns expressed by financial executives including JPMorgan Chase CEO Jamie Dimon.

Rowan estimates the probability of an exogenous shock to be between 30 and 35 percent, much higher than the usual risk level, he said.

According to Rowan, a convergence of forces could destabilize markets, including a “total geopolitical reset,” policies that could prove inflationary by restricting work and trade, and the broad cycle of artificial intelligence that is reshaping employment and economic growth.

“Almost everything we do, intentionally or not, has the potential to be inflationary,” Rowan said, apparently referring to President Donald Trump’s tariffs and U.S. immigration policy.

“Restricting the supply of goods, restricting the supply of labor and the free movement of goods and labor – perhaps for good and valid reasons that need to be done – are all inflationary in the short term, even if we see no signs of it,” he said.

On AI, Rowan predicted socio-economic upheaval: “Almost every job will be improved or replaced. We are going to witness a complete reversal: ascendancy of blue-collar workers and stress of white-collar workers. »

Business and consumer balance sheets remain strong, while public finances are strained, he added.

While Apollo is experiencing strong results today, Rowan said, it is preparing for more turbulent times ahead.

The company has improved the credit quality of its fixed-income investments, reduced its exposure to riskier sectors such as software and stockpiled about $40 billion of cash in its insurance business.

“That means we invest with an eye toward protecting our capital and making sure we’re there to weather cycles through corrections, which frankly we expect,” Rowan said.

But Rowan – who transformed Apollo by expanding into insurance in 2009 through Athene, a seller of annuities and retirement products – reserved his sharpest remarks for other insurers. The insurance industry provides Apollo with a large and stable pool of capital to invest, similar to the “float” insurance model popularized by Berkshire Hathawayand is now at the heart of its strategy.

“Not everyone in our industry is doing what they should be doing. Not everyone is running their business the same way we did it,” Rowan said. “We fear contagion.”

Contagion would mean tensions would spread across the sector, increasing the risk that regulators or central banks would be forced to intervene to protect insurance and pensions customers.

Rowan did not name specific companies that he said were acting poorly.

But he suggested that some insurers are relying on what he called “egregious” practices – including offshore structures in Cayman, complex secured loans and aggressive credit assumptions – that could make some balance sheets appear stronger than they are.

“What we can do is be transparent, commit to higher ratings, strengthen our capital and manage the business for the long term,” Rowan said.