Did Iowa exercise due diligence in opening door for insurance executive with checkered past?

Last of three parts

London investment fund manager Nicola Horlick received an email from the UK’s Financial Conduct Authority in May 2019, asking about her new business partner’s problems in Kenya.

Horlick, who once lost about 10 million pounds in an investment with U.S. Ponzi scheme fraudster Bernie Madoff, was negotiating the sale of 60% of her asset management fund to Newpoint Capital & Guarantee, the latest venture of London insurance executive Keith David Beekmeyer.

Reviewing the application for Newpoint to buy a majority of Horlick’s company, the Financial Conduct Authority regulator wrote that Beekmeyer failed to disclose his arrest in Nairobi, potentially violating the authority's "honesty, integrity and reputation" test.

Pressed about his failure to disclose his arrest, Beekmeyer denied culpability.

“I did not sign or complete the form in question,” he wrote in an email to the chief operating officer of Horlick’s business, Bramdean Asset Management.

Internally, the Financial Conduct Authority's concerns set off a fight among Newpoint’s leaders, according to communications later attached in a court filing.

Andy Bye, the company's chief risk officer and a longtime associate of Beekmeyer’s, blamed CEO Alex Woolgar. In an email that is part of the court filing, Bye wrote that Woolgar filled out the application on Beekmeyer’s behalf while Beekmeyer was on vacation. Bye accused Woolgar of forging Beekmeyer’s signature.

"The implications of this are obvious," Bye wrote.

He added: “We have spent considerable time proving Keith’s good name, he has told everyone his past and been up front ― if he was to have filled this out he would have been diligent.”

Woolgar was having none of it. In a response to Beekmeyer and Bye, he wrote that Beekmeyer’s version of events was “an utter load of nonsense.”

He said he and Beekmeyer had gone through the application “line by line.” He said Beekmeyer asked him to fill out and sign the form because of Beekmeyer’s “computing inadequacy.” He added that they learned the Financial Conduct Authority had been maintaining a file on Beekmeyer for 20 years. (An authority spokesperson did not respond to an email from the Register seeking comment.)

“Keith for the avoidance of doubt,” Woolgar wrote, “whilst you are busy running away from your obligations, you have created this. You are your own worst enemy."

Ultimately, the Financial Conduct Authority approved the acquisition. But the relationship between Beekmeyer and Woolgar was broken.

Audits question health of the web of companies backing new entrant to Iowa mutual reinsurance market

Beekmeyer and Woolgar had formed Newpoint Capital in late 2017 after a mutual contact put them in touch. Woolgar said they planned to meld their expertise ― Beekmeyer in insurance, Woolgar in asset management.

They planned to run three lines of business. First, they would sell commercial indemnity and guarantees ― insurance on loans between companies.

Next, the company would offer a financial engineering service to small insurance firms that would allow them to sell more policies. Lastly, they would use money from the first two lines of business to operate an investment business.

Woolgar said Beekmeyer dubbed him “the posh kid," a polished face who attended boarding school and studied architecture at the University of Westminster. Beekmeyer, by contrast, hailed from London's poor East End, sported a cockney accent and frequently committed spelling and grammar errors in emails.

Woolgar would represent Newpoint in meetings with regulators and potential business partners. Scaling the company, Woolgar said Newpoint bought several small, offshore insurance firms. Woolgar traveled to Bermuda, Gibraltar and St. Kitts and Nevis.

However, Woolgar said, word was out about Beekmeyer's past. In 2014, according to the Nairobi outlet X News, police arrested Beekmeyer in Kenya after a business partner accused him of defrauding traders and obtaining an insurance license under false pretenses.

Woolgar said regulators continually asked about the arrest. Some acquisition targets backed away.

“I didn’t know about this Kenya stuff” before starting the business with Beekmeyer, Woolgar said. “If I did know at the time, there’s a very, very strong chance ― I would say a 99% chance ― that I wouldn’t do it.”

He said he grew frustrated with Beekmeyer’s decisions, including the hiring of employees and contractors with checkered pasts.

According to company meeting minutes, Newpoint hired Richard Dvorak as chief operating officer of its new U.S. company, despite his 1998 guilty plea in a $13 million federal tax fraud case. The company also hired Tim Cook to handle public relations, even though a federal judge convicted him of securities fraud in 2015, ordering him to pay about $800,000.

Beekmeyer also hired Trevor Saliba as a company director, despite the U.S. Financial Industry Regulatory Authority barring Saliba from working as a broker for failing to make proper disclosures in regulatory applications.

Woolgar said Beekmeyer had a “tricky” personality. He could be “sweet as pie” when he needed something. But, Woolgar said, Beekmeyer was stubborn and “skinned like a rhinoceros.”

As Woolgar pushed him to launch the asset management business, he said Beekmeyer yelled at him during meetings.

“You see the temperature start to rise,” he said of Beekmeyer’s boardroom demeanor. “And all of a sudden, the steam comes out of his ears. It’s pretty difficult. It’s not what you and I would call a corporate approach.”

The board fired Woolgar in August 2020, citing the email he sent a year earlier to Beekmeyer and Bye. A company attorney told Woolgar that his message was "a serious form of harassment by bullying."

Since his firing, Woolgar has sued the company for unpaid wages because his contract ran through 2025. A judge sided with Woolgar, but lawyers are arguing over the exact amount of money that the company owes.

Following Woolgar's departure, Beekmeyer has added several companies, many of them with little to no assets. The businesses form a complicated web across several countries and islands, a structure similar to the Dai Ichi Kyoto reinsurance firm, where Beekmeyer cut his teeth 30 years ago before the business collapsed amid a fraud investigation.

Newpoint Capital & Guarantee, the original company, sits somewhere in the middle of the web, according to company filings. NFG Sarl, a Swiss business, is at the top, claiming $2 billion in assets.

Other firms in the web include Newpoint Financial (Europe), Newpoint Financial Corp., Newpoint Securities, Newpoint Funding and Newpoint Insurance Brokers. Audits show the companies frequently loan money among themselves, for undisclosed reasons.

A 2019 audit of NPFC SPV 1, a Wyoming-based financial holding company inside the web, shows the business received a large loan through a confusing exchange.

An unnamed “independent third party” loaned the company 20 notes worth a total of $500 million. According to the audit, the unnamed lender backed up these notes with $500 million in an unnamed "financial institution." NPFC can get the money if it gives the financial institution 60 days' notice.

In November 2019, according to the audit, NPFC transferred $100 million of these notes to Newpoint Reinsurance in St. Kitts and Nevis. NPFC appears to have transferred more of those notes to Newpoint Reinsurance since then, as the Caribbean company's 2022 audit showed $150 million in notes on its balance sheet.

Those loans account for about two-thirds of the assets of Newpoint Reinsurance, often called Newpoint Re.

A spokesperson for Armanino, the firm that audited the Wyoming company, did not respond to an email asking why the report does not disclose the source of those mysterious notes ― or where the cash backing up those notes can be found. In its 2019 audit, Armanino did add a disclaimer, writing that its employees did not review all of the company's finances "due to time constraints imposed by Newpoint Financial management."

Willie Reddic, a Syracuse University accounting professor and former Florida insurance regulator, said such a disclaimer on an audit is a red flag.

"(Armanino) can't say, 'You're committing fraud,'" Reddic told the Register. "But they can say, 'We're not going to give our seal of approval.'"

The company's accounting is important for Iowans. Heartland Mutual Insurance Association in Algona became a Newpoint Reinsurance customer in June. Leaders at other farm mutuals, which are losing coverage from traditional reinsurers at the end of December, have told the Register that they are considering becoming Newpoint Reinsurance customers as well.

According to Newpoint Reinsurance's 2022 audit, only about 6% of the company's financial assets are considered Level 1, a designation that indicates the assets are safe. Usually, these are assets like cash or government bonds.

The rest of the assets ― including the mysterious notes ― are considered risky, Reddic said. He added that he rarely sees insurance companies with such a low percentage of safe assets.

Reddic said state regulators have to investigate the source of the notes propping up Newpoint Reinsurance's balance sheet, if consumers ask them to.

"The department of insurance in Iowa should have that information," he said.

A potential source for any investigation would be Jitender Singh Thind, an accountant who audits Newpoint Reinsurance and most of Beekmeyer’s other companies. Woolgar said Thind specializes in small businesses and works out of his home in southwest London.

Typically, Woolgar said, companies with hundreds of millions of dollars in stated assets would tap a major auditing firm to review their finances. Those firms can dedicate multiple certified public accountants to reviewing a business's books and offering a stamp of approval to outside executives.

“How (Thind is) auditing a reinsurance company in Nevis, I struggle with that,” Woolgar said.

Some experts believe St. Kitts and Nevis is a territory ripe for fraud. In a 2022 evaluation, the Financial Action Task Force rated the effectiveness of most of the island's policies as "low" in curbing money laundering. The Guardian has decribed it as "the world's most secretive ofshore haven."

Some regulators have raised concerns about Newpoint’s auditing.

In October 2022, the Bermuda Monetary Authority announced that it would wind up General Professional Indemnity Ltd., a company linked to Beekmeyer. Newpoint Capital listed GPIL Bermuda as a “related party” in its 2020 audit.

GPIL filed a notice with the New York secretary of state in December 2021, announcing that Newpoint's Wyoming company sold GPIL about $5 million in government bonds. The filing does not state what Newpoint got in return for those bonds.

But the two companies appeared to operate in tandem: Amid the government-enforced windup in Bermuda, Newpoint Capital petitioned a judge to let a Newpoint-approved liquidator serve as the receiver over 10 GPIL-held accounts.

In a court petition concerning the windup, attorneys for the Registrar of Companies wrote that GPIL filed 2019 and 2020 audits that “were, in the BMA’s view, inaccurate.” The lawyers added that GPIL “was not able to provide correct financial statements” in May 2021 and failed to pay claims to two reinsurance customers.

A California-based firm in the Newpoint network announced the acquisition of another Bermuda reinsurance firm in 2021. But the deal was off a year later.

The California company, Newpoint Financial Corp, sued the Bermuda Monetary Authority in U.S. federal court in November 2022. The company’s attorneys wrote that the Bermuda regulators engineered a “nefarious, bad-faith plan” to “defame, harass (and) injure” the company.

According to Newpoint, the Bermuda officials blocked the company’s acquisition in part because regulators in other countries told them that Newpoint leaders are “unlikely to comply with directions or other regulatory obligations.” The Bermuda regulators also allegedly said the company does not meet “Eligible Capital Rules” to operate a reinsurance firm on the island.

Bermuda Monetary Authority officials did not respond to multiple requests for comment from the Register. The regulators also did not address the company’s statements in its legal filings, instead arguing that Newpoint can’t sue them in U.S. court.

A federal judge agreed, dismissing the case in September.

Newpoint, meanwhile, continued to loan money across its network of business. In March 2023, according to an SEC filing, the California company loaned $500,000 to a sister company, which in turn loaned the money to Mutual Underwriters, the Indiana firm now offering reinsurance to Iowa farm mutuals.

SEC filings do not spell out the exact relationship between Newpoint and Mutual Underwriters. But Sean Murray, Mutual Underwriters' managing director, told the Register in an email, "We are all one and the same (smiling face emoji) so to speak, meaning we represent them."

Allan McCashin, a Gibraltar consultant who worked with the company on potential acquisitions on the peninsula, said some executives didn't want to do business with Newpoint after looking at its financial reports. He said the company's balance sheet is "smoke and mirrors," with loans from one Newpoint entity to another propping up its stated assets.

"It's the classic. House built on sand," McCashin wrote in a WhatsApp message to the Register. "To credit (Beekmeyer) is good at it. He gets away with it because people don't think someone would do what he's doing or they haven't even thought it possible."

Iowa's small rural mutual insurers have few options other than reinsurance from company they know little about

Small-town insurance managers have sought Jared Carlson's advice this year.

Carlson, the CEO of Heartland Mutual Insurance Association in Algona, has worked with Mutual Underwriters since Iowa regulators successfully petitioned a judge to approve a 7-year contract between the two companies in June. Mutual Underwriters collects 15% of customer premium payments as a management fee and provides coverage to Heartland through Newpoint Reinsurance.

Because of a bill passed by the Legislature at the Iowa Insurance Division's urging, Mutual Underwriters also sits on Heartland's board.

Since then, the Indiana company has recruited more potential customers in the state as one of the three traditional reinsurance providers for Iowa mutuals went into liquidation and another exited the business. The third provider cut some customers, leaving 17 of Iowa's 76 mutuals without state-mandated reinsurance this summer.

Carlson said he received calls from some of his fellow mutual executives. For the most part, the callers wanted to know if Mutual Underwriters oversaw Heartland too strictly.

"As far as coming in and managing big changes and reinventing the wheel or anything like that? Has not happened," Carlson told the Des Moines Register. "They’ve been good for us to work with. They really have."

But, until a reporter contacted him in late November, Carlson said he had not heard of Beekmeyer, much less the insurance executive's arrest in Kenya, liquidations or accusations of fraud by former business partners.

Carlson told the Register he relied on the Iowa Insurance Division. He added that Heartland would have gone out of business if not for coverage from Newpoint Reinsurance, a sister company to Mutual Underwriters.

"As far as my job," he said, "we've got reinsurance. We've never tested it yet, as far as a big hailstorm and looking for money and things like that. We've had a relatively good 2023 ― or a quieter one.

"When our feet are held to the fire, we’ll find out how this whole arrangement’s going to work."

Iowa Insurance Division spokesperson Chance McElhaney told the Register in an email that regulators inspected Mid-Hudson Cooperative Insurance, a small New York firm that acted as a fronting company for Newpoint Reinsurance. Under the arrangement, Mid-Hudson passes the bulk of Heartland's insurance premiums ― which totaled $5 million in 2022 ― to Newpoint Reinsurance.

Mid-Hudson is responsible if Newpoint Reinsurance doesn't pay claims to Heartland. In exchange, Mid-Hudson receives a fee.

McElhaney wrote that Mid-Hudson posted money in a trust, in compliance with Iowa Insurance Division regulations. However, Mid-Hudson CEO Eddie Harper told the Register that his company will no longer serve as a front at the end of 2023.

"Our capital can't support the gross written premium out of Iowa anymore," he said, meaning his company's balance sheet is too small to cover Iowa's risks.

It's not clear whether another U.S. company has agreed to front Newpoint Reinsurance in 2024. But Mutual Underwriters' contract with Heartland runs for six more years.

"The IID would undergo appropriate due diligence to ensure compliance with the Iowa Code should a mutual present a reinsurance agreement directly with any reinsurer including but not limited to Newpoint Reinsurance," McElhaney wrote.

He declined to answer the Register's questions asking about what due diligence regulators performed concerning Beekmeyer. The Insurance Division also declined multiple requests to interview Commissioner Doug Ommen. McElhaney responded only to written questions.

The state regulators have taken other steps to encourage companies to sell reinsurance to Iowa's farm mutuals. In August, according to internal emails, Insurance Division officials told mutuals in a letter that the state would waive a law requiring reinsurers to pay an unlimited amount of claims during bad years.

Such a change could result in Iowa policyholders not receiving a full repayment for their damaged homes. At the same time, the move could encourage new firms to offer coverage in the state.

In September, McElhaney told policy advisers for Gov. Kim Reynolds that his agency will push for a bill next year to allow companies to sell reinsurance to Iowa's mutuals even if the reinsurers aren't licensed in the state.

Any reinsurer in the state will still need to comply with Iowa's credit requirements, according to an explainer of the bill that McElhaney emailed to Reynolds' office.

Murray, the Mutual Underwriters managing director, told the Register in August that his company was recruiting farm mutuals in Illinois, Indiana, Iowa, Ohio, South Dakota and Wisconsin because many traditional reinsurers have backed away amid costly storms.

In addition to providing coverage through Newpoint Reinsurance, Murray said his company could teach mutuals how to be more efficient. He also said the business would spread risk across a larger geographic area than the traditional reinsurers who have offered coverage in Iowa.

At Heartland, Carlson said Mutual Underwriters provided him with help from an actuary that his firm could not have afforded. He said the actuary has advised Heartland how to adjust prices.

"We want to bring big corporate capabilities to smaller mutuals," Murray said in August.

Mutual Underwriters executives declined the Register's request for a follow-up interview in November. Since this summer, according to the company's LinkedIn page, Mutual Underwriters has touted its services at insurance conventions in Illinois, Iowa, Missouri and Wisconsin.

In South Dakota, Carlson said, Mutual Underwriters has recently contracted with Caly-Union Farm Mutual Insurance and Roberts Mutual Insurance Co. A spokesperson for the South Dakota Division of Insurance told the Register in an email that the agency has authorized Newpoint Reinsurance to provide coverage in the state.

Mutual Underwriters also pursued farm mutuals in Wisconsin. However, a potential deal died in October, Wisconsin Office of the Commissioner of Insurance spokesperson Sarah Smith told the Register, when state regulators required Mutual Underwriters to find a U.S.-based fronting company that would pay the claims if Newpoint Reinsurance failed to do so.

Mutual Underwriters didn't present the regulators with a fronting company, the spokesperson said. (Murray told the Register in a November email, "We are not looking for a fronting company, we already have market solutions." He did not elaborate.)

Marjorie Bjarnarson, a manager of Washington Town Mutual Insurance Co. in Wisconsin, told the Register that hers was one of about 10 mutuals in that state that tried to get reinsurance through Mutual Underwriters this fall. She said a fronting company backed out of a deal with Mutual Underwriters in October, killing the deal. She and three other mutual managers asked the state to allow Mutual Underwriters to cover them through Newpoint Reinsurance.

On Nov. 6, Wisconsin Division of Regulation Administrator Amy Malm denied the request in a letter, citing "the lack of financial information of Newpoint Re" and "the absence of actuarial opinion of Newpoint Re's reserves."

"In this world, it just didn't work out," said Bjarnarson, whose mutual has since announced it will merge with another company.

In Sioux Center, German Farmers Mutual Insurance Association President Jason Moeller is considering whether to partner with Mutual Underwriters. He said company executives stopped by his office in August.

Moeller has been looking for reinsurance since this summer, when West Des Moines-based Farmers Mutual Hail Insurance Co. announced it would exit that line of business. German Farmers Mutual's reinsurance expires at the end of the year, and Moeller said Mutual Underwriters has offered him a contract.

A couple of other potential options have sprouted up since summer.

The brokerage firm Guy Carpenter may offer reinsurance to some mutuals. Representatives from another large insurance broker, Aon, have said they are interested in helping a pool of Iowa mutuals find reinsurance together. But Moeller worries that the company won't be able to put together a contract offer by the end of the year.

Wood Canoe, a consulting firm in New York, is interested in acquiring several Midwestern mutuals, combining their assets. But German Farmers Mutual's board is not interested in selling, Moeller said.

Bermuda-based Somerset Reinsurance Brokers also considered pooling several Iowa farm mutuals to help them find reinsurance. But a representative for the company told Moeller in a Nov. 28 email that Somerset has decided against the plan.

This leaves Moeller with few viable options besides Mutual Underwriters.

"Within the next 30 days or so," he said in late November, "we'll make a decision."

Tyler Jett is an investigative reporter for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett. He also accepts encrypted messages at tjett@proton.me.

This article originally appeared on Des Moines Register: Is Iowa taking a risk by welcoming insurance exec with checkered past?