In April 2020, the New York State Department of Financial Services (Department) entered into four separate consent orders with Athene Annuity and Life Company and Athene Holding, Ltd. (together, Athene); Lincoln Life & Annuity Company of New York (Lincoln); Massachusetts Mutual Life Insurance Company (MassMutual); and Pacific Life & Annuity Company (Pacific Life). Here I briefly discuss the cases.
Athene
The Athene case involves the question of whether the company, in its pension risk transfer (PRT) business, was doing business in New York State without a license. In recent years many major employers have been seeking to shed some or all of their obligations to active and/or retired employees. To do so, they have entered into PRT arrangements. Much of the PRT activity involves major insurance companies such as The Prudential Insurance Company of America and Metropolitan Life Insurance Company. Problems at such companies sometimes arise in their PRT business. For two examples, see No. 293 and No. 301.
In January 2019, the Department began an investigation of Athene covering the period from 2017 to January 2019. The Department concluded that the company had been doing business in New York State without a license. The consent order with Athene explains the Department's findings, describes the injunctive relief, and mentions the imposition of a civil monetary penalty of $45 million. The consent order is in the complimentary package offered at the end of this post.
Lincoln, MassMutual, and Pacific Life
The other three cases involve the question of whether the companies violated New York regulations in the process of replacing deferred annuity contracts with immediate income annuity contracts. The Department conducted investigations of Lincoln, MassMutual, and Pacific Life. In separate consent orders, the Department found violations of the disclosure and suitability requirements in Regulations 60 and 187. The consent orders are in the complimentary package offered at the end of this post.
In the Lincoln case, the investigation covered the period from January 1, 2011 to March 31, 2019. The Department imposed a civil monetary penalty of $510,000 and obtained injunctive relief in the form of remediation and restitution.
In the MassMutual case, the investigation covered the period from January 1, 2012 to May 31, 2018. The Department imposed a civil monetary penalty of $692,000 and obtained injunctive relief in the form of remediation and restitution.
In the Pacific Life case, the investigation covered the period from January 1, 2012 to April 30, 2018. The Department imposed a civil monetary penalty of $172,000 and obtained injunctive relief in the form of remediation and restitution.
General Observations
The PRT business involves the exchange of large amounts of long-term liabilities and large amounts of long-term assets. It is worrisome that Athene, part of a private equity organization interested in short-term rather than long-term profits, is involved in the PRT business. As for the other three companies discussed in this post, the consent orders involve violations of Department replacement regulations.
New York State Superintendent of Financial Services Linda A. Lacewell and her Department obviously have remained hard at work in spite of the COVID-19 pandemic. I for one am grateful to her and her staff for their efforts under very difficult circumstances.
Available Material
I am offering a complimentary 63-page PDF consisting of the consent order with Athene (15 pages), the consent order with Lincoln (16 pages), the consent order with MassMutual (16 pages), and the consent order with Pacific Life (16 pages). Email jmbelth@gmail.com and ask for the April 2020 package relating to the New York consent orders.
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Email: jmbelth@gmail.com
Blog: www.josephmbelth.com