NC regulators throw cold water on Lindberg deal to sell insurers

Disgraced billionaire Greg Lindberg is welcome to come up with plans to make policyholders of his insurance companies whole again, but state regulators will control the process, said a spokesman for the North Carolina Department of Insurance.

Regulators reacted today to a surprise announcement from Lindberg that he has a stock deal to sell his four insurers for $307 million. Those insurers remain in the receivership process led by the North Carolina insurance department.

"Before any such sale can occur, Mr. Lindberg is required to submit the proposal to the North Carolina Department of Insurance for approval, which he has not yet done," said Jason Tyson, communications director for the department. "If the North Carolina Department of Insurance receives the proposal, it will be reviewed to determine if it meets the requirements of North Carolina law and is in the best interests of policyholders."

Two weeks ago, a North Carolina Superior Court judge placed two financially impaired insurance companies once led by Lindberg into liquidation. Lindberg remains free after his conviction for trying to bribe state Insurance Commissioner Mike Causey was tossed out by a judge in July.

According to court documents, Lindberg controlled four insurers – Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co., Southland National Insurance Corp. and Southland National Reinsurance Corp. – with about 262,000 policyholders combined.

The insurers were placed in rehabilitation June 27, 2019 by order of the Superior Court of Wake County, North Carolina. Since then, regulators have accused the Lindberg camp of stonewalling efforts to make policyholders whole.

Dueling plans

Causey asked the court Nov. 1 to place Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co. into liquidation. The request was quickly granted.

"This is an important step that will allow more policyholders to get more of their money back, sooner," Causey said following the judge's order. “In the meantime, last week I directed two additional motions to be filed with the court to allow more money to be released from the insurance companies directly to policyholders while the state guaranty associations prepare to disburse their payments."

Meanwhile, Lindberg claimed the deal he worked out will get money back to policyholders.

Upon completion of this sale transaction, including assets held in reinsurance trusts, the North Carolina insurers formerly owned by Lindberg will have $337 million of capital and surplus and will have $3.22 billion in total assets, a press release said.

Total cash and liquid assets, including assets held in reinsurance trusts, shall be $2.1 billion which is equivalent to approximately 95% of the current annuity account value – an extraordinarily high liquidity number in relation to annuity account value.

"With $337 million in capital and surplus and $2.1 billion in liquidity the insurance companies will be in a position of excellent financial strength to meet all policyholder obligations," Lindberg said in the release.

Regulators cannot comment on the deal until they see it, Tyson said. But the department is continuing with the liquidation process, he added.

"The North Carolina Department of Insurance would not be able to release all of the details of our statutory review to the public if a proposal is submitted," Tyson said in an emailed statement. "The department is not prepared to address the terms of any proposed sale until we receive something to review, and in the meantime we will continue moving forward with a plan to get policyholders access to their policies through liquidation.”

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.

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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.