Last year was a busy one for Mark Walter. Not only did he buy a majority ownership in the Los Angeles Lakers, he also became the subject of a federal investigation into whether his companies, including several insurance firms, properly characterized billions of dollars in assets.

A year later, he announced plans to sell his stake in the Lakers, but the investigation continues — and is raising questions about the investment strategies of the insurance industry as a whole.

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Walter, who also owns the Los Angeles Dodgers, is CEO of Guggenheim Investments, a private global asset management company. In 2008, the company acquired several insurers during the financial crisis, selling many of those to his own private investment firm.

As of last year, he owned roughly $1.1 trillion in life insurance assets. Now, investigators are looking to determine if those insurers have the necessary money to make payouts. (Walter has not been charged with any crimes.)

While Walter is in the spotlight, the investigation has raised larger questions about private equity's involvement in the insurance industry.

'Zombie insurers'

Private capital began trickling into the life insurance and annuities sectors following the 2008 financial crisis and didn't look back. Since 2014, private-capital firms have invested over $31 billion into the industry, according to McKinsey & Co.

Some critics, though, say that has led to investing in risky assets and creating a crop of "zombie insurers" that could eventually create a crisis.

Anant Bhalla runs 1823 Partners, a private investment firm. Prior to that, he was in charge of American Equity, a $50 billion insurer that was sold to investment management firm Brookfield in 2023. Bhalla alleges private equity firms are opting for riskier investments than the bonds and other secure, low-yield investments insurers have typically relied on.

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"It's just too high octane fuel going onto these balance sheets in order to make the investments work," Bhalla told Semafor. "They will blow up. And there are zombie insurers hiding today in the marketplace. We know them, we see them, we whisper about them. We need to speak more openly about it."