This story is slowing making the rounds about T. Boone Pickens, Oklahoma State U. and their big insurance debacle. It was a debacle from the start, as far as I was concerned. In short, around 2007, OSU and Pickens were snookered into buying what they thought was going to be $350 million in life insurance policies (on lives of their boosters). And, yes, this made news in at the time and I had to field a bunch of calls about the doing such deals.
Without knowing the real details, I could have told you that any of these huge insurance plans (particularly ones that borrow to pay premiums – doesn’t look like the case here) are very risky. Why? Well, the insurance salespeople have only one thing on their minds: that first premium and the significant % of $ they will get paid from it. They aren’t concerned about 5 to 10 years from now – they aren’t getting paid for that.
If you are interested in the details, it looks like from the following Forbes story that OSU laid out the premiums on the insurance policies out of their own pocket (not donor contributions) with the hopes that some boosters would pass away: http://www.forbes.com/sites/chrissmith/2012/03/20/osu-cowboys-death-wish-goes-unanswered-lose-33-million/. Not a bright gamble if you ask me.
You can look this one up on the web since it involves sports and lots of outlets are covering it. Here was the first story to pass by me:
In short, OSU had second thoughts on the $350 million windfall plan – probably because it made no sense to keep laying out money when all of their boosters were healthy – and tried to get out of it through a technicality in the law (the 10 day revision provision). There might have been other legal angels on this one but they went for one that was black and white, and they came out on the wrong end.