Delaware Life Insurance Co. and Clear Spring Life and Annuity Co. are under parallel investigations by the Securities and Exchange Commission and the U.S. Attorney’s Office in Manhattan, according to the Wall Street Journal (WSJ), over billions of dollars in loans “extended to companies tied to Walter or his conglomerate, TWG Global.” The latter also holds the controlling stakes in both insurance companies, the outlet added.
The investigation revolves around the growing practice of life insurers chasing higher yields and diversification via private credit investments — which gained prominence in the fallout of the 2008 financial crisis. Investigators are reportedly looking into the billions that Delaware Life Insurance Co. and Clear Spring Life and Annuity Co. — which control about $85 billion in funds — invested in other Walter-owned companies.
In June regulatory filings, the two companies noted that “errors were identified related to the identification and presentation of certain related-party investments,” according to WSJ — an understatement given they upgraded an original estimate of $1 billion in affiliated investments to a whopping $16 billion.
Adding an extra layer to the story is that the whole investigation only came about thanks to an internal whistleblower complaint.
Bloomberg previously reported that an internal whistleblower spurred the scrutiny on Walter’s business empire.
The initial...
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