Guggenheim Ties Sink Bonds Of $135 Billion Life Insurer Sammons

Bonds of Sammons Financial Group fell to the lowest since they were issued in June after a report probed the life insurer’s connections to Mark Walter’s Guggenheim Partners.

The company’s bonds due in June 2036 were among the weakest performers in the US investment-grade bond market Monday, with yields widening to about 2 percentage points over the benchmark, compared with 1.47 percentage points a week ago, according to Trace data. The debt was part of Sammons’ $750 million 10-year deal in June, which was followed up two weeks later with $500 million of 5-year securities.

Hunterbrook Media focused an Aug. 16 report on Sammons’ connections to Guggenheim and Walter, whose empire is being probed by prosecutors and US regulators. Hunterbrook, which disclosed its investment arm is short Sammons’ bonds, pointed to Guggenheim filings that suggest the insurer was still considered a related party.

Representatives for Sammons and Guggenheim didn’t immediately respond to requests for comment.

Sammons for years had been considered Guggenheim’s largest shareholder, and the asset manager in turn managed tens of billions of dollars of the insurer’s money. Guggenheim executives have acknowledged that insurance firms and asset managers have a history of cross ownership, which can pose conflicts.

The Hunterbrook report cited a section of a Guggenheim Private Investments filing that says the financial links “create conflicts of interest and an incentive for GPI to favor Sammons’ interests.”

Fitch Ratings gave the West Des Moines, Iowa-based company an A- rating in June, citing “very strong capital” as well as “modestly elevated” exposure to riskier assets.

Guggenheim’s own obligations have been plunging in the secondary market as more details come to light about US prosecutors’ investigation into loans made by Walter’s insurers that were channeled to other parts of his business empire.

Its first-lien term loan due in November 2031 was quoted at less than 80 cents on the dollar on Monday, according to broker runs seen by Bloomberg. That’s down from about 100 cents on July 20.

This article was provided by Bloomberg News.