Truist, Fifth Third Suspend Delaware Life Products Amid Federal Probe

Truist Financial and Fifth Third Bancorp have suspended the distribution of insurance products tied to Delaware Life Insurance, a firm within billionaire Mark Walter's investment portfolio. The move comes as Walter's businesses, including asset manager Guggenheim Partners, face growing pressure from a U.S. federal investigation, according to a Bloomberg report.

Probe Centers on $20 Billion in Loans

The investigation, conducted by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), is reportedly focused on the classification of assets on the balance sheets of Walter's insurers. At the center of the inquiry are more than $20 billion worth of loans that were allegedly not disclosed as affiliated transactions until earlier this year.

This regulatory scrutiny has raised concerns about the financial stability and creditworthiness of Delaware Life, prompting the banks to suspend their roles as distribution channels. Truist and Fifth Third had previously offered the insurer's products to clients through their branch and adviser networks.

Fallout and Delayed Investment

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The probe has had wider repercussions for Walter's firm, TWG Global. In July, credit rating agencies S&P Global Ratings, AM Best, and Fitch Ratings all lowered their outlooks on Delaware Life after the company increased its disclosure of affiliated assets.

Furthermore, a planned $10 billion investment in TWG Global, led by Abu Dhabi's sovereign wealth fund Mubadala Investment Co., has been delayed, according to the report. The deal, announced approximately 15 months ago as part of a larger $15 billion equity raise, has not yet been completed, with no funds having been transferred.

Company Pushes Back

TWG Global has disputed any suggestions of wrongdoing. In a statement this week, the company said that "no one has been harmed, and no one has claimed they were harmed." The firm also stated it has submitted a plan to the Delaware Department of Insurance, which is now under review, that would eliminate its affiliate exposure.