PRT Provider Fined for Unlawful Transactions in New York

New York Superintendent of Financial Services Linda A. Lacewell announced that Athene Holding Ltd. will pay a $45 million penalty to New York state for New York insurance law violations related to its subsidiary Athene Annuity & Life Co. and its pension risk transfer business.

The announcement says the New York State Department of Financial Services (DFS) discovered that Athene solicited and did insurance business in New York without a license.

According to the consent order filed by DFS, Section 1102 of the insurance law prohibits any person, firm, association, corporation or joint-stock company from doing an insurance business in New York unless it is appropriately licensed pursuant to the insurance law or exempted from licensing by the insurance law. In addition, an unauthorized insurer may not make telephone calls, provide access to web portals (except in limited circumstances) or engage in any other manner of communication with any person in New York from outside New York, other than by mail, including email. Also, an unauthorized life insurer may not solicit, negotiate or sell group annuity contracts (GACs) through in-person meetings, telephone calls, mail, emails, access to web portals or any other form of communication from a location in New York.

The DFS found Athene entered into 14 large-scale pension risk transfer transactions involving thousands of New York policyholders, two of which involved New York-based defined benefit (DB) retirement plan sponsors covering tens of thousands of individual policyholders. In contracting these transactions, Athene engaged in thousands of unauthorized communications with New York-based plan sponsors.

In a statement to PLANADVISER, the insurer said, “Athene is pleased to resolve this matter with the NYSDFS, which relates to a previously disclosed inquiry regarding our pension risk transfer (PRT) operations received in January 2019. 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. Pension participants covered by Athene in New York state and elsewhere have received, and will continue to fully receive, all contractual payments and benefits. By expanding into new markets and continuing to provide risk transfer solutions for plan sponsors, Athene has made a long-term commitment to the PRT business. We look forward to providing continued high-quality service and security to our existing approximately 180,000 pension participants globally, as well as serving tens of thousands more retirees in the future.”

As part of its agreement with DFS, Athene will transfer the handling of transactions from Athene Annuity & Life Co. to its New York-based subsidiary, Athene Annuity & Life Assurance Co. of New York.

DFS says it is actively investigating other potential violations in the pension risk transfer market and is also working with Athene and others to bring the entire New York industry into compliance with New York insurance law.