May 23, 2019 / 10:20 PM / 7 months ago

New York state regulator investigating pension transfer deals -sources

    By Suzanne Barlyn
    May 23 (Reuters) - New York state's financial regulator has
subpoenaed four insurance brokers as part of a broad
investigation into an industry in which life insurers take over
corporate pension plans from companies that want to offload
them, according to two people familiar with the matter.
    At issue is whether brokers, who help put such deals
together, solicited insurers who are not licensed in New York to
take on the pension transfers, the people familiar with the
matter said. 
    The New York State Department of Financial Services (NYDFS),
on Wednesday, issued subpoenas to units of Morgan Stanley
      , Aon PLC        , Willis Towers Watson PLC          and
Mercer, a unit of Marsh & McLennan Companies Inc        ,
seeking documents about their communications with insurer Athene
Holding Inc         about "pension risk transfer" transactions,
the people said.
    Athene, while not subpoenaed, was sent a letter requesting
documents and is part of the investigation, the people said.
    Representatives for all of the companies declined to
comment.
    New York's financial regulator has authority to fine
entities that it regulates and revoke their licenses to do
business in New York.
    Pension risk transfers are a lucrative business for life
insurers and others involved with the transactions.
    The deals have been around since at least the 1920s, but
rising interest rates and stock market gains in recent years
have helped to make them more common. That allows companies
looking to purge their pension liabilities to more easily meet
the requirement of fully funding their plans before selling
them. 
    Insurers taking over a plan typically write a group annuity
contract to cover those pensions, which generates payments to
the retirees. Insurers are essentially betting that they will
make more in investments than they pay out in pensions.

 (Reporting by Suzanne Barlyn
Editing by Leslie Adler)
  
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