Insurance providers dive into GPU financing game

Insurance companies are playing an increasing role in GPU financing — deploying their own capital in some cases — while providing backstops for residual values and offtake interruption. 

More insurance firms want data center hardware on their balance sheets for a variety of reasons, Riley Thompson, vice president and head of direct sales at North American equipment lender Mitsubishi HC Capital America, told FinAi News, a sister publication Equipment Finance News. 

For example, cloud computing provider CoreWeave listed American General Life Insurance, Security Life of Denver Insurance and Fidelity & Guaranty Life Insurance as consenting lenders in a GPU financing deal, according to a credit agreement filed with the SEC on Nov. 5, 2025. 

Insurers often have excess cash, “and you’re in a situation where you’re looking at a money market account, or you could take a pretty safe investment, lend it or participate with a big bank lender on a big deal that’s going to have a much higher yield,” Thompson said.  

“This contract that you’re investing in might have an offtake of Nvidia or somebody like that, but you’re getting such a premium for it because ultimately you’re financing a neocloud and not Nvidia.” 

An offtake is a long-term contract in which a buyer agrees to purchase a defined amount of compute hours before or during the buildout of a GPU cluster, according to Global Data Center Hub.  

Life Insurance, private credit 

In many instances, private credit firms seek life insurers as limited partners for these transactions because they supply “cheap capital,” Bernie Margulies, chief executive of American Compute, which provides risk management and insurance solutions for GPU financing deals, told FinAi News. 

Life insurers “have very low yield targets,” he said. “Private credit gets their funds from those places because they’re looking to make a spread. So, if the life insurer … is only looking to get, let’s say, a 5% return profile, and the private credit fund can make a 12% return, they can keep the 7% in between.” 

However, some private credit firms are “doing really risky business with capital that they should be safeguarding,” Margulies said. 

“If you lose all that money, you screw up a lot of consumers,” he said.  

Backstopping risk  

Global data center spending is projected to reach nearly $32 trillion by 2050, according to professional services firm PwC. As more lenders work to grab a piece of the AI buildout, backstops are becoming increasingly crucial for GPU financing.

 Steep depreciation is one major risk, Margulies said.  

For example, a lender might set a 20% residual for a GPU, but the hardware is worth 5% of its original purchase price at the end of the term. Residual value insurance can cover that shortfall, guaranteeing that the residual floor is 20% for the lender, Margulies said.  

Demand is also growing for “offtake interruption” backstops, which provide coverage if a borrower defaults, runs out of money or walks away from a project, which is legally allowed if a data center project is delayed past its service level agreement deadline or is being operated poorly, he said.  

“Projects can fail, and for the lenders, that’s just a risk they don’t want to take,” he said.

Editor’s note: This story first appeared on FinAi News, a sister publication of EFN. 

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