Senate Finance Committee Chair Wyden launches investigation of private placement life insurance actions

(Updates with statement from Lombard)

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Senate Finance Committee Chair Ron Wyden (D-OR) launched Monday an investigation into the use of private placement life insurance by the wealthy to avoid and evade taxes.

Wyden recently forwarded correspondence to Lombard International, a subsidiary of the private equity firm Blackstone.

“I write seeking information regarding the growing use of Private Placement Life Insurance (PPLI) policies as a tax shelter for the wealthiest Americans,” Wyden wrote in the letter to Lombard International Chief Executive Officer Stuart Parkinson. “I am concerned that these insurance vehicles are being used without a genuine insurance purpose to invest in hedge funds and other investments while avoiding billions of dollars in federal taxes.”

Wyden said Lombard International (Lombard) is one of the market leaders in the PPLI industry. Lombard markets PPLI policies to invest in hedge funds, private equity funds, and other financial products while avoiding income and estate taxes.

“As Chairman of the Senate Finance Committee, I am conducting an investigation into the use of PPLI policies and other loopholes exploited by the wealthiest 1 percent of Americans to avoid paying their fair share in taxes,” Wyden wrote.

Wyden requested Lombard provide information that includes providing the current dollar value of assets under administration by Lombard International with respect to PPLI products held by Lombard clients, an explanation of how Lombard International calculates the dollar value of assets under administration about PPLI products, and a list of all pooled investment funds in which PPLI products of Lombard clients are invested, and the current fair market value for each such fund to the extent of aggregate Lombard client PPLI product ownership.

In a statement issued by Lombard on Wednesday, the company said: “Lombard International Group and its member companies fully comply with all applicable legal, regulatory and fiscal requirements in the jurisdictions where they conduct business.”