In its first enforcement action in the pension risk transfer market, the New York State Department of Financial Services has slapped Athene Holding Ltd. with a $45 million penalty for doing insurance business in the state without a license.
Athene Annuity & Life Company, a subsidiary of the holding company, entered into 14 large-scale pension risk transfer transactions involving thousands of New York policyholders, the department said in a release. Two of those involved New York-based plan sponsors covering tens of thousands of individual policyholders.
In a typical pension risk transfer transaction, a plan sponsor, usually an employer offering pension plan protection to its employees, transfers all or a portion of the assets and liabilities of a defined benefit pension plan to a life insurance company. In turn, the life insurance company issues a group annuity contract obligating it to make benefit payments to plan participants or to the plan sponsor.
In September 2019, after learning that unauthorized life insurers and their representatives were operating in the pension risk transfer market, New York chief financial services regulator Linda Lacewell sent a letter to all life insurers and insurance producers operating in the state advising them of their obligations under state insurance law and directing them to fix any violations, according to the release.
An Athene spokesperson wrote in an email that the company was “pleased to resolve this matter with the NYSDFS.”
“We worked collaboratively with the NYSDFS to address their concerns, which also relate to the industry at-large, and with mutually agreed upon guidelines for structuring transactions, we are confident in our ability to continue operating as one of the leaders in the pension risk transfer industry,” the spokesperson wrote. “Pension participants covered by Athene in New York State and elsewhere have received, and will continue to fully receive, all contractual payments and benefits.”
The spokesperson also said that Athene filed an 8-K Monday noting that as of Dec. 31, the company’sconsolidated balance sheet showed an accrued liability in the amount of the fine.