Information About Affiliated Investments Reduction Plan & Control Remediation Plan
Zionsville, Ind. (September 11, 2026) – On June 26, 2026, Delaware Life Insurance Company disclosed in its 2025 audited financial statements and Q1 2026 quarterly statements the reclassification of a material portion of the private credit investments held in its investment portfolio from “unaffiliated” to “affiliated.” This reclassification followed our receipt of a grand jury subpoena issued by the U.S. Attorney's Office for the Southern District of New York in early February 2026 and a subsequent internal investigation. The U.S. Securities and Exchange Commission is conducting a parallel investigation.
We are aware of the media coverage which followed our financial statement disclosures in June. Delaware Life is committed to keeping our policyholders, producers, employees, and other stakeholders informed of the progress we’re making to significantly reduce the level of our affiliated investment holdings following the reclassification issue and improve our related counterparty due diligence, affiliate reporting and transparency, and investment governance controls. This update summarizes what happened; recent developments, including a definitive agreement designed to significantly reduce affiliated investments; recent ratings actions; and planned improvements to our system of internal controls.
What Happened
Through our internal investigation, we identified errors relating to the identification and reporting of certain related-party investments. Specifically, the returns of certain private credit investments were determined to be predominantly contingent on the performance of affiliates. Under statutory accounting rules applicable to insurance companies, the discovery that the returns of certain private credit investments were predominantly contingent on the performance of affiliates required us to reclassify the investments from unrelated to affiliated.
“Related party” and “affiliated” investments are technical classifications based on the relationship between an insurance company and the investment counterparty. Investment transactions with related parties and affiliates are permissible under state insurance law but must be disclosed as such in the notes to the insurance company’s statutory financial statements, as well as in detailed investment schedules which accompany those statements. In some cases, transactions with affiliates also require prior approval from the insurance company’s domestic state insurance regulator.
Once we discovered this misclassification, we made the necessary accounting corrections in our financial statements and concluded that deficiencies existed in our internal control over financial reporting because we did not identify the misclassification issue on a timely basis.
It is important to note that our financial statement disclosure-related changes did not change Delaware Life’s capital and surplus or reported earnings for year-end 2024 or 2025, and the company’s audited financial statements were accompanied by unqualified independent audit opinions.
Our Financial Strength Ratings
What’s changed and why.
On June 26, 2026, Delaware Life disclosed the reclassification of a material portion of its private credit investments from unaffiliated to affiliated, the receipt of a grand jury subpoena in connection with an investigation by the U.S. Attorney’s Office for the Southern District of New York, and a parallel investigation by the U.S. Securities and Exchange Commission. All three rating agencies took action in July 2026 following these disclosures.
S&P rating actions were driven by:
In its release, S&P affirmed Delaware Life’s A- issuer credit and financial strength ratings while revising the outlook from Stable to Negative. The revision was due primarily to internal control deficiencies and execution risk associated with the company’s remediation plan and the possibility of higher credit risk charges following the restructuring of the investment portfolio. Read the S&P press release in its entirety here.
Fitch rating actions were driven by:
In its release, Fitch placed Delaware Life’s ratings on Rating Watch Negative, including the company’s insurer financial strength rating of A-, due in part to the reclassification of private credit investments as affiliated or related-party assets, and to related governance, financial reporting, and investment oversight considerations. Read the Fitch press release in its entirety here.
AM Best rating actions were driven by:
In its release, AM Best affirmed Delaware Life’s financial strength rating of A- while revising the outlook from Positive to Negative, due in part to the reclassification of investments from unaffiliated to affiliated. Read the AM Best press release in its entirety here.
Our Affiliated Investments Reduction Plan
After we issued our financial statements in June, we immediately began working with our parent company, TWG Global (“TWG”), on plans to reduce the level of our affiliated investments. We recently finalized several agreements to do just that, which taken together support what we’re calling our “Affiliated Investments Reduction Plan.”
Asset exchanges: On August 17, 2026, we entered into a definitive Purchase and Sale Agreement with TWG to exchange up to $6.5 billion of Delaware Life’s recently reclassified private credit investments for an equivalent amount of non-affiliated investments from TWG. The closing of the transaction is subject to the company's receipt of required regulatory approval.
Immediate impact: On a pro forma basis, assuming the full $6.5 billion is exchanged and depending upon how Delaware Life holds certain exchanged assets, this asset exchange transaction with TWG could reduce Delaware Life’s total affiliated investment holdings (as a percentage of its total general account invested assets) from 39% as of June 30, 2026 to approximately 26% after the transaction is completed. We are targeting the closing of this transaction prior to the filing of Delaware Life’s third quarter financial statements.
Additional pay downs: TWG also has committed to purchase additional recently reclassified private credit investments from Delaware Life pursuant to the terms of an Asset Purchase Agreement. Under this agreement, we expect to further reduce Delaware Life’s total affiliated investment holdings (as a percentage of its total general account invested assets) to approximately 20-25% by year-end 2026, and to less than 10% by June 30, 2027. Please note that Delaware Life is under no regulatory requirement or external mandate to reduce the amount of its affiliated investments to a certain level by the end of the year, or by any other date. The Asset Purchase Agreement with TWG is also subject to the company’s receipt of required regulatory approval.
The table below shows the carrying value of Delaware Life’s affiliated assets as of December 31, 2025, March 31, 2026, and June 30, 2026. During 2Q 2026, the company received the outstanding principal balance related to the payoff of $0.9 bn of investments that were predominantly contingent on the performance of affiliates.
| $ in mm | December 31, 2025 (Restated)(1) | March 31, 2026 | June 30, 2026 |
|---|---|---|---|
| Affiliated Assets | 18,251 | 19,799 | 19,148 |
| General Account Invested Assets(2)(3) | 43,883 | 48,184 | 49,336 |
| % Affiliated Assets | 42% | 41% | 39% |
(1) Restated December 31, 2025 amounts reflect additional related-party investments disclosed in the Company’s 2025 audited financial statements, which were omitted from the Company’s 2025 Annual Statement. (2) General Account Invested Assets represent Cash and Invested Assets (net) per Page 2, Line 12, Column 3 of Delaware Life’s statutory financial statement. (3) Delaware Life’s statutory financial statements for each respective period are found here: 12/31/2025, 3/31/2026, and 6/30/2026.
Our Control Remediation Plan
In addition, we have developed a Control Remediation Plan. The plan has been accepted by the company’s independent audit committee and is targeted for completion prior to the filing of our December 31, 2026 statutory financial statements. Key planned actions include but are not limited to:
Strengthening counterparty due diligence
Improving related-party and affiliate reporting and transparency
Enhancing Internal Audit monitoring
Engaging third-party advisors for industry benchmarking and to develop control best practices
In addition, we are planning to strengthen several elements of our investment governance processes.
Why You Can Be Confident
Upon identifying the issue, we owned it, disclosed it, and took immediate actions to address it.
Delaware Life’s financial strength ratings remain unchanged. For a summary of recent ratings actions with links to the full ratings agency reports, please refer to our ratings action summary here.
There is no change to the terms of your policy, benefits, or our service commitment to you.
We will provide periodic updates on this page as we continue to make progress to reduce the level of our affiliated investment holdings.