The Big Short Guy Is Back — And This Time He's Betting Against Your Insurance Company

The sequel nobody asked for

When the guy who shorted subprime before the world fell apart in 2008 says he's spotted the next crack, it's worth a coffee break to listen.

Lee Robinson — the British short-seller who turned $20 million into $200 million betting against housing, and who somehow didn't make it into the movie — just told Bloomberg his firm Altana is launching a fund designed to profit from a downturn in private credit. The twist: he's not shorting the funds directly. He's shorting the insurance companies that bankrolled them, names like Lincoln National, MetLife, and Berkshire Hathaway.

The timing is almost too neat. The same week Robinson's trade went public, Apollo capped withdrawals from its private credit fund after investors tried to yank nearly 17% of their money. These two stories aren't a coincidence — they're the same story told from two ends.

'There's been no run. There's been no SVB' — Apollo's co-president, the same week his fund had to stop investors from pulling nearly 17% of their money.

What actually happened at Apollo

Apollo Debt Solutions, a fund with about $25 billion in assets, got redemption requests for 16.8% of its shares this quarter. That's up from roughly 11% the quarter before. Apollo's response: a hard 5% cap on how much investors can take out, with gross outflows estimated at about $700 million for the quarter against just $300 million coming in.

Here's the thing to understand. These funds are 'semi-liquid' — they let regular investors buy a slice of private debt and, in theory, cash out periodically. But the loans inside aren't liquid at all. You can't sell a five-year loan to a software company on a Tuesday afternoon. So when too many people ask for their money at once, the manager pulls a lever called a redemption cap, which says: you get a fraction of what you asked for, the rest waits.

Apollo frames this as the system working. Co-president John Zito put it plainly: 'There's been no run. There's been no SVB.' And he's right that nobody's collapsed — the fund has returned 8.13% since launching in 2022. But it's worth noticing that Apollo, Cliffwater (17% requested), BlackRock (13%), and Partners Group (9.8%) have all hit the same brakes in the same stretch. A structure that's 'performing as designed' is also a structure that keeps needing to stop people from leaving.

Why the insurance angle is the smart part

Robinson's trade is clever because he's not trying to time the funds — he's going after the deepest pocket holding the bag. Life insurers have been among private credit's biggest buyers, lured by the fat yields on debt from non-bank lenders. Moody's says US life insurers held $807 billion of private credit and illiquid assets at the end of 2025 — a fifth of their combined fixed-income portfolio, up from 18% a year earlier, with 'weaker credit quality' in the mix.

So if private credit valuations get marked down or defaults rise, insurers feel it on their balance sheets — and their stock prices could feel it first. Robinson's already been holding credit default swaps (essentially insurance that pays out if those insurers can't meet obligations) since at least April. The new fund just lets outsiders ride along.

For you, the takeaway isn't 'panic.' It's 'follow the exposure.' The risk in private credit doesn't stay neatly inside private credit funds. It threads through the annuity and life-insurance products millions of people own. That's the whole point of shorting insurers as a proxy — the path from a private loan going bad to a publicly traded insurer taking a hit is already built.

The bigger picture — and what to watch

Private credit is a $1.8 trillion sector, and regulators have said they don't see it as a systemic threat. That may well be true. But plenty of money is clearly hedging anyway: JPMorgan and Goldman Sachs are building products to protect clients against private credit risk, and S&P launched a credit default swap index tied to the sector in April. When the plumbing for betting against something gets built this fast, it tells you where the nervous capital is looking.

The underlying worry keeps coming back to one word: software. A lot of private credit went to software companies, exactly the businesses investors now fear AI could disrupt. If those borrowers stumble, the loans sour, valuations drop, and redemption requests turn into a stampede against funds that legally can't pay everyone at once.

What to watch: whether next quarter's redemption requests climb above this quarter's, whether any insurer flags private credit losses in earnings, and whether the caps stay at 5% or funds are forced to do something messier. The absence of an SVB-style blowup so far is real. But 'no run yet' and 'designed so a run can't happen' are not the same sentence.