Two regional banks have halted distribution of insurance products linked to Delaware Life Insurance as federal scrutiny intensifies around companies tied to billionaire Mark Walter.
Truist Financial and Fifth Third Bancorp paused offering Delaware Life policies through their branches and adviser networks after regulatory review raised questions about the insurer’s financial disclosures and credit profile. The action reflects concern among distribution partners about how the insurer’s holdings are classified and how that could affect its creditworthiness.
Regulatory review and the loans at issue
U.S. regulators including the Securities and Exchange Commission and the Department of Justice are scrutinizing Walter’s insurers and Guggenheim Partners, the asset management firm with which he is associated. The inquiry focuses on more than $20 billion of loans that appear on the insurers’ balance sheets but were not labeled as affiliated until this year. The classification change has prompted closer examination from both regulators and counterparties.
In response to the increased disclosure of affiliated assets, major ratings firms altered their view of Delaware Life. S&P Global Ratings, AM Best and Fitch Ratings reduced their outlooks on the insurer in July after the company disclosed a larger amount of affiliated holdings.
Investment and capital plans affected
The regulatory developments also affected a planned capital injection into TWG Global that had been led by Mubadala Investment Co. That proposed $10 billion contribution has been delayed, and the broader TWG capital raise that would have totalled about $15 billion has not closed, with no funds transferred so far.
Separately, TWG has rejected allegations of misconduct, stating that no one has been harmed and that no claims of harm have been made. The company reported that it has submitted a remediation plan to regulators intended to remove its affiliate exposure, and that the Delaware Department of Insurance is reviewing that proposal.
Related portfolio moves
As Walter repositions assets within his holdings, one notable transaction this month involved the sale of the Los Angeles Lakers at a cited $12.5 billion valuation. That move is part of broader adjustments in his investment footprint.
The combined effect of regulatory scrutiny, rating outlook reductions and the suspension of bank distribution channels has introduced near-term uncertainty for distribution partners, investors in related companies, and the insurer itself.
Summary
- Truist and Fifth Third have stopped distributing Delaware Life insurance products amid a federal inquiry into affiliated loans on insurers’ balance sheets.
- Regulators including the SEC and DOJ are examining insurers linked to Mark Walter and Guggenheim Partners over classification of more than $20 billion in loans.
- A planned $10 billion Mubadala-led investment in TWG Global has been delayed and the broader $15 billion equity raise remains incomplete.