Global Bankers Insurance Group LLC's acquisition plans slowed in late 2018 when it withdrew from at least two deals as news emerged of a federal criminal investigation into the company and its principal owner, Greg Lindberg.
A letter sent by Global Bankers to state regulators and seen by S&P Global Market Intelligence said a $585 million deal to buy Lincoln, Neb.-based Lincoln Benefit Life Co. was terminated, effective Oct. 1, 2018, without explaining why. But one state official familiar with the case told S&P Global Market Intelligence via email that news accounts concerning a grand jury probe into Lindberg and Global Bankers "may shed light on the decision."
Global Bankers also abandoned another deal, a takeover of Cincinnati Equitable Cos. Inc. The deal was announced in February 2017, but its termination has not been reported previously.
"Both parties agreed to walk away from the transaction when the stock purchase agreement expired [Oct. 1], due to Global Bankers' inability to gain regulatory approval from the Ohio Department of Insurance," Cincinnati Equitable CEO Greg Baker told S&P Global Market Intelligence by email.
"We knew nothing about the reasons why the Ohio Department of Insurance would not approve the transaction, but we can assume it had to do with some of the issues that came to light in the news reports from early October," Baker said.
A Lindberg representative said he had no comment in response to questions about the timing of the deal cancellations and whether the actions were tied to the federal probe. Lindsay Andrews of PR agency Sard Verbinnen & Co., an outside representative for the Global Bankers insurance group, said the company declined to comment on either transaction.
As for the investigation, she provided this statement from a company representative:
"We are aware of a federal investigation. We intend to cooperate with the government and provide information it requests. We are continuing to operate as usual. Our entire team is focused on serving our policyholders and businesses, and limiting any potential disruptions."
NC regulator subpoenaed for records
News of the federal grand jury investigation into Lindberg, his Eli Global LLC and the related insurance group emerged in a report by Raleigh, N.C.-based WRAL-TV on Oct. 2, 2018, although a reported subpoena by Assistant U.S. Attorney Daniel Ryan connected to the probe was sent to North Carolina industry regulators Sept. 11, 2018.
Issued by the U.S. District Court for the Western District of North Carolina, the subpoena is addressed to the North Carolina Department of Insurance and demands records pertaining to Lindberg's business dealings and to Eli Global as well as Global Bankers and other affiliates of the Durham, N.C.-based group. A copy of the subpoena posted by WRAL says the probe is "an official criminal investigation of a suspected felony," and it contains a notice indicating that because it is focused on "drug offenses, crimes against financial institutions, or money laundering," federal law prohibits any financial institution employee from revealing the subpoena to those named in it.
The investigation involves several states, WRAL cited an unidentified source as saying in October.
On Oct. 31, WRAL reported that Insurance Commissioner Mike Causey had turned over $240,000 to the U.S. Marshals Service that had been donated for his 2020 re-election campaign by the North Carolina Republican Party. He said he was told the money was part of the investigation.
A few days earlier, on Oct. 29, a complaint was filed with the state Board of Elections & Ethics Enforcement claiming that out of about $1.9 million Lindberg had given to the state GOP last year, about $250,000 had been handed to Causey "upon Lindberg's request," according to a copy of the filing posted by WRAL. The complaint alleges that the money given to the Causey campaign was an attempt to get around individual contribution caps that limit one person to giving $5,200.
Eli Global grew rapidly in insurance
Greg Lindberg, Eli Global chairman and founder |
Lindberg describes himself on his website as a self-made entrepreneur who began his first business while still a Yale undergrad. A healthcare-focused newsletter called Home Care Week that he began publishing then is still produced today by Eli Global, which Lindberg says has grown into an enterprise with 132 operating units, over $3 billion in annual revenue and some 10,000 employees.
Eli Global's first life insurance acquisition, of Southland National Insurance Corp., came in 2014. Lindberg says on his website that the group now consists of more than a dozen acquired insurers and reinsurance treaties with total life and annuity assets of $9 billion, operating under the Global Bankers brand. He also says Eli Global has "never sold a company and [doesn't] plan to do so in the future."
Global Bankers was set to acquire Lincoln Benefit Life from Resolution Life LP, which was founded by veteran U.K. dealmaker Clive Cowdery. The Cowdery group recently agreed to acquire the Australia and New Zealand wealth protection and mature business of AMP Ltd. for A$3.45 billion.
Weldon Wilson, CEO of Lincoln Benefit Life, declined to comment on acquisition matters when asked why that deal ended, and a Cowdery representative in London declined to comment except to say: "The AMP acquisition is not linked to Lincoln Benefit."
Neither Lincoln Benefit Life nor Global Bankers appears to have formally announced the termination of their agreement, which was announced in October 2017, although S&P Global Ratings cited it in late November 2018 as the reason for removing the company from CreditWatch with developing implications. A.M. Best, an insurance-focused rating agency, also ended a review with developing implications of the insurer for the same reason.
A unit of Allstate for 75 years, Lincoln Benefit Life was placed into runoff in 2013 and sold to Resolution for a reported $600 million in a deal that closed in 2014. By the time Global Bankers agreed to buy it, the company still had about 200,000 policyholders and, as of the end of June 2017, more than $9.5 billion in policy reserves and $572.4 million in statutory capital and surplus, according to the would-be acquirer.
In its application to buy Lincoln Benefit Life, Global Bankers said it had cash on hand to cover the entire value of the deal. The acquisition was to be made through unit Southland National Holdings, since renamed GBIG Holdings Inc.
Whether Lincoln Benefit Life is still up for sale could not be determined by S&P Global Market Intelligence.
The other dropped acquisition target, Cincinnati Equitable, is controlled by Chairman Peter Alpaugh and Andrea Kessel and has two operating units, Cincinnati Equitable Life Insurance Co. and Cincinnati Equitable Insurance Co. The group reported $40.9 million in 2017 revenue from its life insurance operation, with a pretax operating loss of about $1.1 million, according to statutory filings. Through the first nine months of 2018, the company posted a $664,000 loss on revenue of $33.1 million.
CEO Baker said the Cincinnati group plans to remain independent "but will entertain options to sell, for the right situation." A spokesman for the Ohio Department of Insurance did not comment on whether the regulator refused to accept the Cincinnati Equitable takeover, although he confirmed that Global Bankers' application for approval was withdrawn.
In North Carolina, a spokesman for Causey did not respond to a request for comment, while a spokeswoman for the U.S. Attorney's office in Charlotte said she could not confirm or deny the existence of an investigation.
European deals still pending
Eli Global said in October that it had made 24 acquisitions in 2018 to that point, and typically does 30 deals a year with values ranging as high as $300 million. Earlier in 2018 Global Bankers announced two transactions involving the insurance operations of European companies, including an agreement to buy Portugal-based GNB - Companhia de Seguros de Vida SA from Novo Banco SA for €190 million. The other involved acquiring Italy-based Pramerica Life SpA from Prudential International Investments Corp., a unit of Prudential Financial Inc.
In 2017, Global Bankers affiliates acquired the Luxembourg life insurance unit of Dutch insurer NN Group NV; a Dutch closed-book life insurer called Conservatrix; and a portfolio of in-force life and annuity policies from France's BPCE Vie SA.
The Global Bankers spokeswoman said the company had no comment on either of the announced European deals, or if they have closed or remain pending.