Truist, Fifth Third pause products tied to Mark Walter firm amid probe

Investing.com reports that Truist Financial and Fifth Third Bancorp have paused distribution of products linked to billionaire Mark Walter's Delaware Life Insurance as a U.S. federal investigation intensifies pressure on Walter's investment empire. The regulatory scrutiny has also delayed a planned $10 billion investment in Walter's TWG Global by Abu Dhabi sovereign wealth fund Mubadala Investment Co. The Securities and Exchange Commission and Department of Justice are investigating Walter's insurers and the asset management firm he co-leads, Guggenheim Partners.

The probe centers on over $20 billion in loans held on the insurers' balance sheets that were not correctly classified as affiliated until this year. Truist and Fifth Third suspended their roles as distributors of Delaware Life products due to concerns about the insurer's credit ratings. The banks' offerings of Delaware Life products through branches or advisor networks were affected.

S&P Global Ratings, AM Best, and Fitch Ratings lowered their outlooks on Delaware Life in July due to an increase in disclosed affiliated assets. TWG has denied wrongdoing, stating that "no one has been harmed, and no one has claimed they were harmed." The company submitted a plan to regulators to eliminate its affiliate exposure, which is currently under review by the Delaware Department of Insurance.

The Mubadala-led investment in TWG remains incomplete, 15 months after it was announced, with no money exchanged. This investment was part of a larger $15 billion equity capital raise TWG planned. Walter has also been restructuring his holdings, including agreeing to sell the Los Angeles Lakers for $12.5 billion.