Regional banks Truist Financial Corp. and Fifth Third Bancorp have temporarily stopped selling products from Delaware Life Insurance Co., a major insurer controlled by billionaire Mark Walter. The pause comes as U.S. regulators investigate Walter’s business empire, according to sources familiar with the matter.
Background of the Pause
The banks had been offering Delaware Life’s annuities and life insurance through their branches and adviser networks. The products carried the insurer’s own risk, with the banks acting as distribution channels. However, the ongoing probe has raised concerns about the insurer’s financial stability, prompting the lenders to step back.
Regulatory Scrutiny on TWG Global
Delaware Life is the larger of two insurers under Walter’s holding company, TWG Global. In June, both insurers disclosed that they had over $20 billion in loans on their books that should have been classified as affiliated but were not. TWG Global has stated it is working to resolve regulatory concerns and emphasized that “there has been no fraud.” The company added, “There is no victim here. No one has been harmed, and no one has claimed they were harmed.”
Impact on Distribution and Ratings
While new sales are paused, Delaware Life remains in contact with client advisers at both Truist and Fifth Third. Representatives from the banks declined to comment, but a Delaware Life spokesperson said, “Our communications with key distribution partners remain open and cooperative.”
In July, S&P Global Ratings and Fitch Ratings lowered their outlook on Delaware Life following the surge in disclosed affiliated assets, which can signal a potential ratings cut. S&P, which maintained its “A-” rating, warned it could lower the credit rating if Delaware Life fails to implement a remediation plan or if government actions “significantly weaken the company’s financial measures beyond our assumptions.”
Walter’s Response and Next Steps
Mark Walter has been actively reshaping his businesses in response to the situation. He recently agreed to sell the Los Angeles Lakers at a record $12.5 billion valuation, less than a year after taking control of the team. TWG Global has also explored other ways to free up cash and unveiled plans to buy up to $6.5 billion of affiliated assets from Delaware Life in exchange for an equal amount of unaffiliated assets.
In a statement this week, TWG Global reaffirmed its commitment to cooperating with the Justice Department and the Securities and Exchange Commission. The company noted that its Group 1001 segment, which houses its insurance holdings, has submitted a “straightforward plan” to eliminate affiliate exposures.