Guggenheim's purchase of the Dodgers to close April 30, reportedly insurers will be tapped
It's still up in the air whether Security Benefit Life Insurance Co. will make an investment in the Los Angeles Dodgers, but the carrier isn't opposed to it, according to finance chief John Frye.
“We'd love to have the insurer be a part of it if it meets our investment parameters,” he said in an interview with InvestmentNews. “We've had a relationship with Guggenheim [Partners LLC] since 2009, and they have delivered the value. Because of our relationship with Guggenheim, our investment portfolio continues to be one of our strengths.”
The insurer has been the subject of chatter since Mark Walter and Todd Boehly, chief executive and president of Guggenheim, respectively, teamed up with Earvin “Magic” Johnson on a $2.15 billion deal to purchase the Dodgers in a deal that will close April 30.
Among the other parties involved in the purchase are Stan Kasten, former president of the Atlanta Braves; Peter Guber, CEO of Mandalay Entertainment Group; and Bobby Patton, an oil and gas investor.
Though Guggenheim Baseball Management, a private partnership that's helmed by Mr. Walter, is the actual entity handling the purchase, The New York Times' DealBook reported Monday that Guggenheim's insurers — which include Security Benefit, Guggenheim Life and Annuity Co. and EquiTrust Life Insurance Co. — will be chipping in on the purchase.
Guggenheim spokeswoman April Emspak had no comment.
Mr. Frye said that at this point, Guggenheim hasn't asked his firm to make a contribution toward the purchase of the Dodgers, but if it did, it would make up a very small portion of the carrier's overall portfolio. Such an investment would be subject to regulatory review to ensure that it met state-based guidelines, he added.
“If we did [contribute], we're talking a small percentage — less than a percent or maybe half a percent” of the overall portfolio, Mr. Frye noted. “We would go through an independent process to make sure it makes sense for the insurance company.”
Indeed, while insurers are known for being conservative investors that pour money into long-dated investment-grade corporate bonds, other types of assets are also in the mix, including mortgage-backed securities and alternative assets.
The average life insurer has 5% to 6% of its general account invested in these alternative strategies, noted Jeremy Rosenbaum, associate director and lead analyst on Security Benefit at Standard & Poor's.
A prospective investment by Security Benefit in the Dodgers would be treated as an alternative asset by S&P, he added.
“From a ratings perspective, it would depend on the size of the actual investment relative to Security Benefit's general account,” he said. “Assuming they structure this the way they invest in other alternative assets, then this would be ratings-neutral.”
This transaction wouldn't be the first time an insurer snapped up a stake in a professional sports franchise. USAA, for instance, once held a stake in the San Antonio Spurs, selling it off in 1996 to The Holt Cos.
