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Apollo-to-Goldman Embracing Insurers Spurs State Concerns

Until April 2011, Patrick “Pete” Dodd, a former money manager at Liberty Life Insurance Co. in Greenville, South Carolina, invested customer premiums in what he calls a “squeaky clean” portfolio: bonds backed by state governments and blue chip corporations.

Then a company funded by private equity firm Apollo Global Management LLC acquired Liberty and inherited its clientele, mostly people approaching retirement who had bought annuities from the company to supplement their Social Security. Now the unit’s holdings include securities backed by subprime mortgages, time-share vacation homes and a railroad in Kazakhstan.