Apollo’s Rowan warns of correction risk and insurer contagion

Apollo CEO Marc Rowan warned of a potential market correction and criticized unnamed insurers for practices he said could worsen sector stress.

Apollo Global Management CEO Marc Rowan warned Wednesday that markets face an unusually high risk of an outside shock and said the asset manager is positioning more defensively for a potential correction.

The warning comes even as the economic backdrop remains firm and Apollo is reporting strong results. The firm reached $1 trillion in assets under management and posted record fee-related earnings, but Rowan said that strength may be masking risks tied to geopolitics, inflation and artificial intelligence.

Rowan put the odds of an exogenous shock at 30% to 35%, which he described as well above normal. He cited a possible “total geopolitical reset,” inflationary pressure from restrictions on trade and labor, and disruption from AI as forces that could unsettle markets.

“Everything we see in front of us is actually quite strong,” Rowan said, while warning of a greater chance of outcomes that fall outside ordinary expectations.

Apollo has responded by moving higher in credit quality, reducing exposure to riskier areas such as software and keeping about $40 billion in cash inside its insurance business. Rowan said the firm is investing to protect capital and remain prepared if markets turn.

He also delivered a sharp critique of some insurers, saying Apollo is worried about contagion if conditions deteriorate. Rowan, who expanded Apollo into insurance through Athene in 2009, did not name specific companies.

He pointed to what he called “egregious” practices at some firms, including offshore Cayman structures, complex collateralized loans and aggressive credit assumptions that he suggested could make balance sheets appear stronger than they are.

“Not everyone in our industry is doing what they should do,” Rowan said. “We do worry about contagion.”

Any broader stress in the insurance sector could draw closer attention from regulators or central banks because of the industry’s role in retirement and annuity products. For now, Rowan’s comments add to a growing set of warnings from major financial executives that strong headline conditions may not fully reflect the risks building beneath the market.