NEW YORK, July 31 Guggenheim Partners has agreed
to "enhanced" protections in its purchase of Sun Life Insurance
and Annuity Company to safeguard policy holders, paving the way
for state approval of the deal, New York's top financial
regulator said in a statement on Wednesday.
The protections could serve as a model for private equity
firms buying annuity companies in the future, adding layers of
scrutiny in a bid to shield retirees and other long-term
investors who typically buy annuities.
Benjamin Lawsky, Superintendent of Financial Services, has
previously pointed to worries about the recent trend of private
equity firms acquiring annuity businesses.
As recently as Tuesday, Lawsky said he was concerned about
private equity firms' "short-term focus" in these purchases.
A fixed annuity is an insurance contract that guarantees an
investor a minimum monthly payment.
The added protections by Guggenheim include heightened
capital standards, a separate backstop trust account, enhanced
regulatory scrutiny of operations, dividends, investments,
reinsurance and stronger disclosure and transparency
requirements, the state Department of Financial Services said on
"These policyholder protections can and should serve as a
model set of guardrails for addressing the emerging trend of
private equity firms seeking to enter the annuity business,"
Lawsky said in a statement.
"Other non-traditional insurance industry investors asking
us to approve similar transactions are going to have to step up
and clear a high bar for protecting policyholders," he added.
The regulator is also weighing a $1.55 billion purchase by
Athene Holdings Ltd, which is funded by an affiliate of Apollo
Global Management LLC, of the U.S. annuity business of
Britain's Aviva Plc.