Key facts
- Federal investigations are examining Mark Walter's business empire, focusing on loans from his insurance companies to other Walter-controlled entities.
- Delaware Life Insurance Co. identified over $16 billion in loans that required reclassification as affiliated or related-party assets.
- TWG Global, a Walter-controlled company, plans to purchase up to $6.5 billion in assets from Delaware Life to mitigate risk.
- Credit rating agencies have downgraded the outlook for Delaware Life and Clear Spring Life due to the related-party transactions.
- Mark Walter's group is selling its majority stake in the Los Angeles Lakers for $12.5 billion amidst the ongoing probe.
Federal investigations are casting a shadow over Mark Walter, the owner of the Los Angeles Dodgers, due to alleged financial impropriety involving his insurance companies. The probe centers on the alleged misclassification of loans issued by insurers controlled by Walter to other businesses within his empire.
These investigations have brought to light the practices of private-equity-owned insurers that invest policyholder premiums into riskier assets. Walter, who co-founded Guggenheim Partners in 1999, acquired several insurance companies in the early 2010s and began shifting their investments towards higher-yield debt. Notably, in 2012, Walter's insurers reportedly provided significant funding, between $100 million and over $300 million, to help finance his acquisition of the Dodgers.
More recently, Delaware Life Insurance Co., an insurer controlled by Walter, uncovered over $16 billion in loans that required reclassification as affiliated or related-party assets following a grand jury subpoena. This brought such loans to 40% of its invested assets, a figure noted by Fitch Ratings as the highest among North American life insurers it reviews. To address this, Walter's holding company, TWG Global, plans to purchase up to $6.5 billion in assets from Delaware Life. Clear Spring Life and Annuity Co., another insurer Walter controls, also had to restate $4.6 billion of its assets as affiliated.
Credit rating agencies Fitch, S&P Global, and AM Best have all downgraded the outlook for both Delaware Life and Clear Spring Life, although they continue to rate them highly financially. TWG Global has stated it is cooperating with the investigation and that Walter has acted in good faith. The controversy comes as Walter's group is reportedly selling its majority stake in the Los Angeles Lakers for $12.5 billion.