Tennessee regulators search for Southland policyholders after liquidation

Tennessee officials are searching for policyholders as regulators and courts continue to unwind the tangled finances of troubled insurance magnate Greg Lindberg.

A North Carolina judge recently approved the liquidation of Southland National Insurance Company's assets. It is one of four insurers once owned by Lindberg.

It has been a long wait for policyholders. According to court documents, Lindberg controlled four insurers with about 262,000 policyholders combined:  Southland National Insurance Company (SNIC), Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co., and Southland National Reinsurance Corp.

A North Carolina Superior Court judge placed Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co. into liquidation in November.

In most cases, the SNIC policies were purchased through funeral homes in Tennessee by individuals and families seeking to cover their final expenses, the Tennessee Department of Commerce and Insurance said in a news release.

The funeral homes sold SNIC life insurance policies to the consumers to pay for the pre-need plan costs. According to court records, Southland National has 4,630 life insurance policies in Tennessee with combined payable death benefits to policyholders of $26,935,460.

With the court-ordered liquidation, the Tennessee Life & Health Insurance Guaranty Association Act will be utilized to assist consumers, the release said.

When a member insurance company is found to be insolvent and is ordered to be liquidated by a court, the Act enables the guaranty association to provide protection (to Tennessee residents who are holders of life and health insurance policies and individual annuities with the insolvent insurer. This assistance has specific limits that are included in the law.

The TLHIGA is working with guaranty associations in other states as well as SNIC’s receiver in North Carolina to ensure that any claims under SNIC policies are paid.

Tennessee regulators shared the following news:

1. To maintain existing coverage with a SNIC policy, all Tennessee SNIC policyholders must continue to pay premiums in order to maintain their coverage.

2. Nonpayment of policies will result in the cancellation of policies in accordance with the policy terms.

3. Under the Act, life insurance policies are guaranteed up to the limits under the policy or $300,000 (whichever is less).

4. Neither TDCI nor TLHIGA has individual policy records.

SNIC policyholders can continue to utilize the same contact information to obtain the policy services that they have been using thus far. SNIC customers can continue to call 800-277-8762 for policy services or by email at [email protected].

Lindberg trial II

Meanwhile, Lindberg is scheduled to go on trial in July for a second time on charges of attempting to bribe North Carolina Insurance Commissioner Mike Causey.

Lindberg had been sentenced to more than seven years after being convicted of attempting to bribe Causey to secure preferential regulatory treatment for his insurance business. The 4th Circuit panel declared that Judge Max Cogburn had erred by giving jurors in Lindberg’s trial misleading instructions before they began deliberations. Lindberg was freed last summer.

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.

He also faces Securities and Exchange Commission charges for allegedly participating in a $75 million fraud, the SEC said in an August complaint. The complaint names a Malta-based registered investment adviser, Standard Advisory Services Limited, and two top executives – Lindberg and Christopher Herwig.

From July 2017 through 2018, according to court documents, Lindberg and Herwig violated their fiduciary oath to advisory clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in their best interest.

A Lindberg spokesperson has said that the SEC complaint is weak and was filed after the SEC was "shown millions of pages of documents to prove them wrong.”

Last week, Lindberg asked a Wake County, N.C. court to allow $40 million that is to be used to satisfy Lindberg's personal tax liabilities instead to be used to purchase annuities from those Colorado Bankers Life and Bankers Life policyholders who face hardship.

Under the Wake County court's March 3 order, $40 million from the sale of one of Lindberg's companies is to be held in escrow until the court determines what amounts may be released to satisfy Lindberg's income tax obligations incurred by the sale.

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.