An entrepreneur in North Carolina spent the last five years acquiring life insurers throughout the United States, then allegedly invested as much as 50% of their assets on ‘personal enterprises’ to the tune of $2 billion – which he then used to buy luxuries such as a Gulfstream jet, vacation homes, and even a 214-foot yacht christened the ‘Double Down.’
However, the good times may be coming to an end now that regulators are looking to close the loopholes he allegedly exploited.
According to a Wall Street Journal investigation, Greg Lindberg channelled loans from the insurance companies he owned through intermediaries, then told regulators that the funds were going to unaffiliated borrowers – a move which effectively masked his actions.
“Insurance-company assets are not intended to be a piggy bank for your other activities,” Therese Vaughan, a professor of insurance and actuarial science at Drake University, told WSJ.
Responding to Lindberg’s transactions, the National Association of Insurance Commissioners (NAIC) proposed a rule change that looks to address future attempts to mask related-party investments. According to WSJ, the change would require similar pass-through arrangements to be reported as affiliated.
Meanwhile, regulators in Lindberg’s home state of North Carolina are supporting legislation that seeks to limit the amount insurers can invest in affiliated subsidiaries. According to WSJ, a North Carolina law already limits an insurer from investing more than 10% of its assets in subsidiaries but, unlike some other states, doesn’t specifically apply that to an owner’s affiliated ventures.
“The statute needs to be clarified so there’s no fuzzy or grey area,” Mike Causey, North Carolina’s insurance commissioner, told WSJ.
A spokesman for Lindberg brushed off the increased regulatory focus on his actions. “These latest regulatory developments should have little impact on the operations of Mr. Lindberg’s insurers,” the spokesman told WSJ.
