On December 7, 2021, the Financial Stability Task Force of the National Association of Insurance Commissioners (NAIC) discussed private equity ownership of life insurers. The task force will assign a subsidiary working group to examine issues related to private equity ownership of insurers (though not necessarily exclusive to private equity-owned insurers). It published a draft list of the issues to be considered.
The list specifically includes issues related to pension risk transfers like Athene’s transactions with pension plans sponsored by JCPenney, Lockheed Martin and Alcoa. It includes consideration of the complex investments used by private equity-owned insurers to support these pension obligations and how obligations to plan beneficiaries would be met if the investments do not perform as expected. It also includes a review of Department of Labor protections for pension beneficiaries and state guaranty association coverage of benefits.
Another issue listed in the draft document is the use of offshore reinsurers and complex affiliated sidecar vehicles. Athene disclosed that in 2020 it reinsured 80-100% of deposits held by its US insurance subsidiaries to its Bermuda reinsurance subsidiaries. Athene also stated that it used a sidecar investment vehicle in the JCPenney and Lockheed Martin transactions.
The task force is made up of state insurance commissioners, including those from Florida, New York, Pennsylvania, Texas, and California each of whom has received multiple emails from workers and retirees over the past several months asking them to investigate Apollo-backed Athene’s pension risk transfer deals. As of December, those five insurance Commissioners on the Task Force had received a combined 115 such requests via this website alone.
Retirees whose pension benefits are now in the hands of Athene may be interested in following these developments.
Read the NAIC’s full list of draft regulatory considerations here.