* Lawsky focusing on Sun Life, Aviva transactions -sources
* Concern over private equity firms' oversight
By Karen Freifeld
July 16 New York's top financial regulator is
examining whether to let two insurers with links to investment
firms buy annuity businesses, perhaps imposing requirements to
cut potential risks to policyholders, people familiar with the
The requirements could reduce the attractiveness of such
deals for buyout firms.
One review by the New York state Department of Financial
Services focuses on a proposed $1.35 billion purchase by
Guggenheim Partners' Delaware Life Holdings LLC affiliate of
Canada's Sun Life Financial Inc's U.S. annuity
business, the people said on Tuesday.
The other centers on 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, the people said.
Before granting approval for the Aviva purchase, the
regulator is discussing having Apollo meet several requirements
to protect policyholders, including higher capital standards
than for traditional insurers, greater disclosure and greater
clarity on who oversees the corporate structure, one of the
"We understand the New York regulator's concerns and we
remain committed to working to address these issues," Athene,
said in a statement. Athene's majority owner is AP Alternative
Benjamin Lawsky, the department's superintendent, in an
April speech said he was concerned about an emerging trend of
private equity firms buying annuity businesses.
A fixed annuity is an insurance contract that guarantees an
investor a minimum monthly payment.
Many insurers are trying to get out of the annuity business
because profits can be hard to come by amid historically low
interest rates and elevated market volatility, and as a wave of
baby boomers start to enter or approach their retirement years.
Lawsky has expressed concern that private equity firms'
"short-term focus" raised a risk that they might provide
inadequate oversight or customer service, a concern given that
annuities are often sold to senior citizens on fixed incomes.
Private equity firms are not a natural fit for the insurance
business, Lawsky has said. They typically make high-risk
investments with failed ventures seen as the cost of doing
In May, the regulator issued subpoenas concerning such
issues to at least five firms, including Guggenheim and Apollo,
one of the people familiar with the matter said.
Lawsky's agency declined to comment. Guggenheim, Delaware
Life, Sun Life and Apollo were not immediately available for
The focus on the Aviva purchase was earlier reported by The
Wall Street Journal.
Aviva's U.S. operations are headquartered in Iowa. That
state's insurance division will hold a hearing on the
transaction on Wednesday, a spokesman for the regulator said.
"Aviva is almost entirely an Iowa company," Athene said in
its statement, and would comply with all regulatory and capital
requirements of Iowa regulators.
The New York-based Aviva unit, which needs Lawsky's
approval, represents less than 3 percent of Aviva's U.S.
operations, the statement said. The company plans to merge that
business with Presidential Life, Athene's larger and stronger
New York company.
The merger would increase the capital reserves, eliminate the
need for non-traditional financing and make the Aviva New York
unit more stable, the statement said.