North Carolina Court Upholds Regulations in Lindberg Insurance Case
North Carolina Court of Appeals Enforces Stringent Regulations in Greg Lindberg Affiliated-Asset Case
In a significant decision for the insurance industry, the North Carolina Court of Appeals upheld strict regulatory measures concerning entities associated with Greg E. Lindberg. This decision maintains stringent controls over asset movements and supports active receivership efforts designed to protect policyholders of several insurers impacted by these actions.
The case centers on four insurance companies acquired by Lindberg in 2014: Southland National Insurance Corporation (now in liquidation), Bankers Life Insurance Company, Colorado Bankers Life Insurance Company, and Southland National Reinsurance Corporation, all of which are undergoing rehabilitation. Post-acquisition, these companies were re-domesticated to North Carolina. Initially, an agreement allowed these insurers to invest up to 40% of their assets in related businesses under Lindberg’s control.
With Mike Causey assuming the role of Commissioner in 2016, the cap on affiliated investments was lowered from 40% to 10%. This adjustment aimed to address concerns over the misalignment between the investments and the liabilities to policyholders, which could potentially lead to financial shortfalls in meeting policyholder claims.
In June 2019, a memorandum of understanding (MOU) was established to mitigate these issues, requiring the segregation of specific affiliated companies into a new holding company overseen by an independent board. This restructuring was part of a broader rehabilitation agreement. However, when the affiliated companies missed the restructuring deadline, legal action was initiated on October 1, 2019, citing breach of the MOU and fraud, alongside a request for a temporary restraining order (TRO) to prevent asset devaluation.
The TRO imposed additional restrictions on the financial activities of Lindberg and related entities, which were sustained and extended by consent. Following a 2021 bench trial, the court ordered the implementation of the MOU without awarding damages. This order was upheld by the Court of Appeals in June 2023 with instructions to determine damages promptly.
In 2024, enforcement actions escalated, and the court appointed a limited receiver to oversee compliance. Subsequent court orders imposed additional constraints, such as requiring court approval for transactions from specified affiliated companies exceeding $10,000 and advance notice requirements to the receiver.
For industry stakeholders, the decision on December 17, 2025, signals North Carolina's proactive approach in leveraging TROs and receivership mechanisms to address challenges with insolvent insurers and complex affiliated investment arrangements. Such measures reaffirm the state's commitment to safeguarding policyholder interests in intricate financial and regulatory environments.