Several major investment firms including Apollo Global Management LLC, Guggenheim Partners and Harbinger Group, have received subpoenas from the New York Department of Financial Services. The Wall Street Journal cited sources who are familiar with the regulatory investigation.

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Other firms which reportedly received subpoenas in connection with the investigation were Global Atlantic Financial Group, an insurance provider, and Goldman Sachs Group, Inc. (NYSE:GS), which once owned the insurer. Tiptree Financial Partners LP was also subpoenaed due to its buyout of another insurer.

According to the publication, New York regulators are looking into investments that back fixed annuities. It involves a segment of the insurance industry which offers hundreds of thousands of consumers steady, guaranteed payments over time. Statistics show that about 15 percent of insurance companies have ties to private-equity firms—compared to just 4 percent last year.

Details On The Regulatory Investigation

Regulators are apparently concerned that as a number of investment firms become connected with or even acquire insurance companies, insurers are starting to make some bets that could be too risky. The agency is concerned that the money used to back those possibly risky bets is needed in order to fulfill those guaranteed payments to consumers, which are often used to help fill in the gaps left by Social Security or other retirement payments.

The agency is looking for documents like memos, emails, financial forecasts and pitch-books for investors that are related to each investment firm’s investments into insurance companies. Regulators are also seeking details on how the investment firms fund insurers and also the investment strategies they use.

The investigation is currently in the beginning stages. Firms which receive subpoenas are not necessarily being accused of doing anything wrong. Regulators reportedly aren’t worried that the firms are doing anything illegal, but they apparently want to know more about the plans of insurers before it begins considering the possibility of introducing new regulations.

Responses From Apollo Global, Guggenheim

The Wall Street Journal contacted Apollo Global Management, and a spokesperson said that none of the firm’s private-equity funds are being used to invest in the insurance company that regulators are investigating, which they said has plenty of cash. A spokesperson for Guggenheim said it welcomes the investigation because it will show off how its long-term investments in insurers provide benefits.

Spokespeople from Goldman Sachs, Global Atlantic and Harbinger declined to make a comment on the investigation, and The Journal was unable to reach Tiptree.