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Billionaire Mark Walter’s insurer Delaware Life for years labelled loans to “Dodger Tickets LLC” as unaffiliated despite Walter owning the Los Angeles Dodgers franchise, before changing tack after US prosecutors started scrutinising the insurer’s private credit holdings.
Last month, filings show Delaware Life reclassified the loans as “level 1” related-party investments — the most closely tied and potentially conflict-riddled type of related-party asset an insurer can own.
Asset managers’ in-house insurers have come under increasing scrutiny from regulators and investors over the linkages between different parts of their empires and whether credit risks are building out of sight.
Walter runs a sprawling holding company TWG Global, which in turn owns insurers Delaware Life and Clear Spring Life and Annuity.
The loans to Dodger Tickets were among more than $100mn of private credit investments that Delaware Life until recently labelled as having no related-party relationship, quarterly filings show.
In June, the life insurer changed the classification to mark the assets as representing a “direct credit exposure” in its filings for the first three months of the year.
The June filings also show that earlier this year the US Attorney’s Office for the Southern District of New York subpoenaed Walter’s insurers Delaware Life and Clear Spring over whether they had failed to adequately disclose ties to their private credit investments.
Some private capital managers have sought to deflect questions about related-party assets, arguing that the classification is too broad and can capture assets that are substantively unaffiliated.
But disclosures from some of the largest US life insurers show that many of these groups make large allocations to debt that is closely linked to related parties.
Analysts, regulators and investors scrutinise life insurers’ levels of affiliated holdings because of concerns they could be storing up under-appreciated risks. In particular, they argue that related-party investments can create conflicts of interest and disadvantage insurance policyholders.
This is because the assets may be bought or sold at the wrong valuations without a market price, and because insurers owned by asset managers may hold back from playing hardball with their parent company if the debt needs restructuring.
The private credit loans were among more than $10bn of investments Delaware Life relabelled, which caused its affiliated assets to jump from about 3 per cent of invested assets to about 42 per cent. Clear Spring’s affiliated holdings have jumped from 5 per cent to 52 per cent of the portfolio.
Delaware Life’s affiliated assets now stand at more than three times the company’s approximately $4bn capital and surplus, or the core funds it has on hand to guarantee future claims.
Delaware Life also shifted an investment in Ballinshire Capital Funding Trust from unrelated to a level 1 related-party asset. As of 2023, a trust by this name was ultimately controlled by Walter’s business partner Todd Boehly, according to disclosures by insurer Security Benefit.
TWG did not respond to a request for comment. Delaware Life and Clear Spring declined to comment.
