the technical provisions, are recorded on a permanent inventory and have to be entirely separated from the insurance company’s own corporate assets and liabilities . Although outside lawyers had advised Lombard back then that the policies weren’t valid and that premiums and fees should be returned to clients, Lombard had continued servicing the unsigned policies until the issue re-emerged in 2016.Lombard’s effort to keep the unsigned policies secret, and the alarms set off by the German customer’s attempted loan, were described by people familiar with the matter and laid out in internal documents, email messages and outside legal opinions reviewed by Bloomberg News.The problem with unsigned policies should be clear to anyone who has read a murder mystery: The people whose death could trigger payouts may not know that others stand to benefit from their demise.
They recommended alerting clients to the oversight and obtaining signatures to confirm the contracts — citing a German civil rule that allows parties to treat voided contracts as binding.German courts haven’t decided whether that rule can be applied to unsigned life insurance policies. It went along with the memo’s recommendations that the company keep quiet about the unsigned policies and stop writing new policies without the necessary signatures, according to a 2007 email and people familiar with the matter.After the episode at VP Bank, it became clear inside Lombard how big the problem was. “It is not possible to render the contracts effective by retroactively re-wording the declaration of consent or belatedly obtaining the insured person’s signature.”PWC also saw problems in another Lombard effort — to get the purchasers of the policies to sign disclaimers stating that they, and not Lombard, were legally responsible for the missing signatures.

In some cases that was because clients didn’t want to reveal details of their succession plans to their heirs, the official wrote.If these policy documents were amended by adding a signature, that would restart the clock to qualify for the tax benefit, according to the official.

Looking over the paperwork, his bankers at VP Bank AG saw a potential problem: The daughter hadn’t signed the policy.The episode set off alarms inside the German operation of Lombard, a global wealth manager and insurer that’s controlled by Blackstone Group Inc. It wasn’t a one-off. About Lombard International Assurance S.A Lombard International Assurance has been partnering with the advisers of high net worth individuals and institutions for over 25 years. For collateral, he offered a future payout from a Lombard policy that insured the life of his daughter. Lombard International Assurance is a leading independent, global wealth solutions provider with deep local market knowledge. We provide superior customised insurance-based solutions to help individuals and institutions ensure their assets are protected, portable and can be passed on.Lombard International Assurance is a leading independent, global wealth solutions provider with deep local market knowledge. Not requiring signatures on these policies had become standard practice among sales representatives who said that asking for them had become “a point of resistance” with prospective clients, the unidentified official wrote. Lombard sought a fresh one.The new attorneys, from CMS International, echoed the lawyers at PWC: Insurers are obligated to get signatures from insured parties in advance, they said.Then they suggested that Lombard might benefit from an untested legal theory. There was also a risk that heirs who felt shortchanged by the policies might sue.“It’s an interesting window on the business that they identified risks and stayed quiet,” says Lawrence Cunningham, a professor at George Washington University Law School. For nearly a decade, Lombard International sat on a secret. If the policies weren’t valid, then withdrawals should have been taxed like any unsheltered investment — and the investors might owe back payments and penalties.The sale of the unsigned policies, and Lombard’s subsequent attempts to mitigate the problem, “could be deemed tax fraud,” according to an internal 2007 report by a Lombard official advising management to keep the problem quiet.Lombard, in a written statement, said it had notified policyholders about the issue and addressed it in accordance with all applicable laws and regulations. Our experts are available to help you.Welcome to our News & Insights page, where you can access updates from our experts regarding legal and regulatory changes and find out what is going on with Lombard International Assurance and the wider industry. That includes the wealthy clients reaping tax benefits, the sales reps at Lombard and affiliated European banks making commissions, and even Blackstone’s funds, which took on Lombard’s liabilities.“What you’ve got here is your basic Russian doll,” says Nell Minow, vice chair of ValueEdge Advisors and a corporate governance expert. In Lombard’s case, few parties would have had an incentive to air the issue. Together we seek to create a secure future for our clients addressing their complex financial needs on a global basis. Lombard wanted to keep servicing the policies, so they would continue to generate fees. It began to unravel in May 2016 when a wealthy German walked into a Luxembourg bank.The man wanted a loan. It’s also unclear what, if anything, Blackstone’s due diligence uncovered before its 2014 Lombard acquisition.Lombard said, “The company promptly reached out to affected policyholders to discuss an option available under German law which enables policyholders to preserve the benefits of their policies.” Most policyholders have addressed this issue, and there has been no adverse impact to Lombard or its clients, it said.The episode illustrates how difficult it can be in the world of finance to figure out who’s responsible if corners are cut.
It began to unravel in May 2016 when a wealthy German walked into a Luxembourg bank. We make legacy count. “It’s a mess if they were charging premiums for invalid policies.”Thank you! This ensures to its maximum extent that the assets held through a life insurance policy with Lombard International Assurance are protected to any financial contingency, in a jurisdiction, Luxembourg, with well-proven and demonstrated track record in the global financial industry and with a … Some clients had taken money out of them while the insured parties were still alive, taking advantage of a now-defunct German law that allowed tax-free distributions from policies after 12 years.

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