NC appeals court deals another blow to Greg Lindberg’s crippled empire

A North Carolina appeals court partially reversed a lower-court ruling today and affirmed liquidation proceedings against insurers once owned by embattled investor Greg Lindberg.

In a unanimous decision, a three-judge appellate panel issued an opinion against GBIG Holdings, which had sought to delay liquidation of Bankers Life Insurance Co. and Colorado Bankers Life Insurance Co. The judges reversed a lower-court ruling granting intervenor status to GBIG.

"GBIG should not have been allowed to intervene and defend against the liquidation petition, as only a company’s directors are permitted to intervene to defend under [North Carolina law]," the ruling states.

The ruling clears the way for liquidation proceedings to continue against the two Bankers Life insurers. It could also help long-suffering policyholders finally get their money, Insurance Commissioner Mike Causey said.

"Today’s well-reasoned decision by the North Carolina Court of Appeals is another critical step in support of my goal of getting policyholders repaid,” Causey said in a statement. “As it stands today, the liquidation order will become effective June 30, 2024. On that date, the various state guaranty associations will begin the process of paying policyholder claims."

Lindberg faces a host of civil and criminal charges for alleged fraud and bribery connected to the downfall of his billion-dollar business empire. He is due back in federal court on May 6 for a retrial for allegedly attempting to bribe Causey to secure preferential regulatory treatment for his insurance business.

Lindberg was convicted and served two years in prison before the verdict was overturned. The 4th Circuit panel declared that Judge Max Cogburn had erred by giving jurors in Lindberg’s trial misleading instructions before they began deliberations.

Deep in debt

Lindberg, founder of the private equity firm Eli Global, eventually acquired several insurers and grouped them together as the Global Bankers Insurance Group.

Insurance profits soared and ultimately enabled Lindberg to funnel $2 billion to Eli Global, according to a Wall Street Journal report. That attracted regulators and initiated Lindberg's downfall as the insurers fell into insolvency.

When Causey filed for liquidation proceedings in November 2022, Bankers Life had assets of $253 million and liabilities of $345 million, while Colorado Bankers Life had assets of $1.37 billion and liabilities of $2.5 billion, court documents say.

Two weeks later, GBIG filed an objection to the petition for liquidation as well as a motion for continuance to allow discovery, asserting that, as the “parent company” of both insurers, it should be allowed to present evidence showing neither company was insolvent.

Wake County Superior Court Judge A. Graham Shirley II rejected GBIG’s motion in a December 2022 ruling, ordering the liquidation.

Guaranty coverage could start

Many state life and health insurance guaranty associations provide coverage up to $300,000 for life insurance death benefits, $100,000 for life insurance policy net cash values and $250,00 in the present value of annuity benefits. Some state life and health insurance guaranty associations are authorized to provide different levels of protection.

Causey, in the midst of a tough race for re-election, acknowledged that Lindberg could continue to delay the liquidation if he chooses.

"Mr. Lindberg can try to push that date back by continuing to pursue meritless appeals," Causey said. "My sincere hope is that he does not, and finally ends this nightmare that he created for policyholders. In the meantime, I will continue to fight for the policyholders to ensure they get all they are owed, and thank the court for this important decision.”

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.