but in the insurance world, that's kind of problematic.

So could you riff on that a little bit? Yeah, and I appreciate you asking about that because when I talk about these issues and I'm really worried about them, the industry acts like it's no big deal and they have some answers and they sound like good answers to most people, but I really want to make sure people understand.

a policy holder, an annuitant, a pensioner, anyone who has a contract with an insurer, a life and annuity, they're counting on them.

It is a fact that they have a rightful legal claim only against their carrier, the name at the top of the policy, whoever that is on a standalone basis.

So if that surplus is really thin and they got a ton of offshore reinsurance, you're going, oh, I'm worried about that.

The industry says, oh, but we've got all this money like in Apollo or in KKR, offshore, as if that makes it okay.

And I want to be clear on this because gap consolidated is fine for investors.

Do something, right? What could you imagine

They literally had a real reinsurance contract that looked perfect.

An examiner would say, oh, this looks good.

But then they had a secret document.

It was called a side letter.

It was a total sham.

They were just helping them look better.

You

got to be at least...

And-

It's actually a really good thing that the feds brought this out because Mark Walter has some big sports clubs.

He bought the Los Angeles, he and policyholders bought the Los Angeles Dodgers years ago.

He recently worked out a deal to sell the Lakers.

So it's getting attention.

I have trouble getting people, like you said, insurance is boring, but now it's starting to get out there.

So the message I want to make clear is that we need to know if it's affiliated.

It's like, it's kind of like the tides are going out here, so.

[laughs]

Right? I've been around 41 years.

So I've got a new company called Deep Dive Analytics.

Transparency matters.

It's not just a good idea.

It is the law.

There are a lot of people in the industry that would rather you not know that.

Get r- get your questions ready.

I mean, if I were them, I'd be going to the regulators, banging on the door, and saying, "Gotta cut this stuff out." What's happening?

It's a great question, and I can answer it to some degree.

A real good example w- A lot of what we're gonna talk about is this offshore reinsurance or secret captive reinsurance in Vermont and a few other states.

That's hiding liabilities.

It is intentionally underfunding those liabilities, because it creates fake surplus on the ceding, the company getting rid of it, right? I don't wanna lose you here.

[laughs] So what happens is that because we can't see what's happening in there, this hole grows until all of a sudden there's a failure.

And so instead of it going from one million to zero, it goes from one million to five billion below zero, because the games they're playing are hiding it.

[laughs] Wow

All right, Tom Gober, what's been the takeaway being here?

I learned that people are hungry for the truth and I spooked them a bit, but I told them there's good news ahead because there are some honest companies out there.

or other aggressive investment firms

who have different objectives from what the traditional executive would have.

The traditional executive would say, we need to invest carefully to make sure we have the money.

But the statute says you have to have enough money right now, but you also have to have enough money 90 years from now.

Life insurance policies, people pay for their child at birth.

So you could be looking at a hundred years, right? So we have to have rules.

One of the most important rules is not too much affiliated paper.

Tom, from someone who's got the history like yours, what are you looking at right now? And what are you going to continue to look at in the news? My next question is, if you're a policyholder watching this, what should be going through your head? But I'm just curious from your standpoint, you don't have to make any predictions, but what are the things have not come out that you're waiting to come out right now?

Walk us through what you call sleight-of-hand reinsurance and how it relates to the Dodgers, and beyond that, if you could explain what you worry it can do to the economy writ large.

Sure.

And this is a really important issue, and I appreciate the opportunity to share with you guys today.

It, you help me reach a larger group in, in the general public.

But reinsurance, when done properly, legally, makes the world go round.

Reinsurance is brilliant.

It helps insurance companies spread risk, right? You can take some of your risk in moving to that reinsurer and some to that one.

But when you see something like this, uh, where do you think it can potentially lead?

We are taking—they would admit up front, we are taking liquidity risk in exchange for a higher yield.

I have a great answer for that, my real concern.

Recently, Athene very significantly ratcheted up the amount of deposit-type contracts they've issued.

In other words— What does that mean? It means that they are borrowing money short-term— And using the proceeds to invest long term.

Oh, okay.

There is a mismatch, obviously, there.

There's a duration mismatch.

$200