NY regulator offers new rules on PE insurer purchases

(Reuters) – New York’s top financial regulator on Friday proposed tougher rules for private equity firms and others buying insurance companies, increasing scrutiny in a bid to protect retirees and others who typically buy annuities.

The proposed changes, including more transparency and disclosure, are modeled on changes the state’s Department of Financial Services has required for such purchases recently.

Last year, for example, Guggenheim Partners agreed to “enhanced” protections in its purchase of Sun Life Insurance and Annuity Company to safeguard policy holders.

Benjamin Lawsky, Superintendent of Financial Services, has previously said he’s concerned about private equity firms and their “short-term focus,” given that annuities are often sold to long-term investors such as senior citizens.

A fixed annuity is an insurance contract that guarantees an investor a minimum monthly payment.

“We’re seeking to strike an appropriate balance that keeps markets open to new entrants, while at the same time putting in place necessary safeguards,” Lawsky said in a statement on Friday.

The proposed rules include stronger disclosure requirements and more regulatory scrutiny of dividends, investments, operations and reinsurance.

The department could also require the acquiring company to provide more capital as well as create an additional backstop trust account.

(Reporting by Luciana Lopez; Editing by Bernard Orr)

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