NY doubles down on captives, private equity firm scrutiny
April 22, 2013 by Elizabeth D. Festa
New York insurance regulators have the captives industry and private equity firms that own annuity companies under a microscope for their effect on financial solvency and stability, and the fear policyholders may be left holding the bag.
The use of captives by insurers places the stability of the broader financial system at greater risk, the New York State Department of Financial Services (DFS) lead supervisor said today in New York.
DFS Superintendent Ben Lawsky even invoked AIG and analogized the use of captives to the same risky practices that precipitated the 2008 financial crisis, issuing subprime mortgage-backed securities (MBS) through structured investment vehicles and writing credit default swaps on higher-risk MBS. Click here to read…