Walter, who also owns the Los Angeles Dodgers, is CEO of Guggenheim Investments, a private global asset management company. In 2008, the company acquired several insurers during the financial crisis, selling many of those to his own private investment firm. As of last year, he owned roughly $1.1 trillion in life insurance assets. Now, investigators are looking to determine if those insurers have the necessary money to make payouts.
Walter has not been charged with any crimes. On August 26, his TWG Global issued a statement saying “despite what has been reported, there has been no fraud” at the company or its subsidiaries, and it was not selling its sports assets to raise capital for the insurance operations.
“TWG stands firmly behind the integrity of its business and remains focused on continuing to deliver value to its stakeholders,” it wrote.
While Walter is in the spotlight, the investigation has raised larger questions about private equity’s involvement in the insurance industry.
‘Zombie insurers’
Private capital began trickling into the life insurance and annuities sectors following the 2008 financial crisis and didn’t look back. Since 2014, private-capital firms have invested over $31 billion into the industry, according to McKinsey & Co.
Some critics, though, say that has led to investing in risky assets and creating a crop of “zombie insurers” that could eventually create a crisis.
Anant Bhalla runs 1823 Partners, a private investment firm. Prior to that, he was in charge of American Equity, a $50 billion insurer that was sold to investment management firm Brookfield in 2023. Bhalla alleges private equity firms are opting for riskier investments than the bonds and other secure, low-yield investments insurers have typically relied on.
“It’s just too high octane fuel going onto these balance sheets in order to make the investments work,” Bhalla told Semafor. “They will blow up. And there are zombie insurers hiding today in the marketplace. We know them, we see them, we whisper about them. We need to speak more openly about it.”
Bhalla’s not alone. Tom Gober, a forensic accountant in Pennsylvania, has sounded warnings about the level of private equity investment in insurance firms.
“Private equity didn’t have to come in and start from scratch,” he told Bloomberg last year. “They already saw what the industry was doing — they just took it and ramped it up to the max.”
