Insurance Capital Rules: Todd Boehly's Contributions to Kansas Campaign

In the weeks leading up to a crucial regulatory decision on insurance capital rules, Todd Boehly and his associates made substantial contributions to the gubernatorial campaign of Vicki Schmidt, Kansas Insurance Commissioner. Reports reveal that contributions exceeding $300,000 came from Boehly's entities, including Security Benefit Life Insurance Co., and multiple executives. These donations coincided with the Kansas Department of Insurance's recommendation to postpone new capital regulations for collateral loans, proposed by the National Association of Insurance Commissioners (NAIC).

The intended regulation seeks to increase capital requirements for collateral loans, a change that could notably affect Security Benefit, given its significant asset allocation in these loans. Security Benefit opposed the swift implementation through a detailed letter advocating for a slower roll-out. Shortly thereafter, a representative from Schmidt's office, who participated in the NAIC meeting, supported delaying the implementation by a year, a suggestion later adopted by the working group.

Eldridge Industries, Boehly's primary holding company, stated their contributions were intended to support pragmatic leaders, emphasizing they do not influence policy decisions at the Insurance Department. Schmidt's campaign clarified that receiving donations from Kansas businesses is a regular occurrence and not indicative of policy influence.

The Kansas Department of Insurance underscored the necessity of adequate transition periods for regulatory changes to prevent market disruption. Security Benefit's significant reliance on collateral loans has drawn attention, as these accounted for nearly half of the life insurance sector’s holdings last year, with a current capital requirement of only 6.8%.

Conversely, advocates for expedited regulatory changes, including the Iowa insurance department, argue these loans provide opportunities for capital arbitrage under current standards. The proposed regulation aims to adjust capital charges based on the risk level of the underlying collateral, potentially increasing them to 30% for certain assets.

Security Benefit highlighted the importance of a sensible timeline for implementation, referencing their successful record with no defaults on collateral loans. They noted the broader industry supports gradual regulatory adaptations. The department confirmed that, while staff attend NAIC meetings as observers, they typically refrain from speaking unless making official comments.

Campaign finance records show that Boehly's contributions constitute a significant segment of Schmidt’s fundraising, with donations largely originating from employees within Boehly’s enterprises. All contributions comply with Kansas state limits for primary campaigns.