The New York Department of Financial Services has launched an investigation into financial arrangements between life insurers and captive insurance companies, the Wall Street Journal reports. Regulators believe certain insurers could be shifting liabilities off their balance sheets onto affiliated companies, most of which are incorporated offshore or in other states and have fewer funding requirements than companies in New York.
The state is on the lookout for a weakening of solvency standards for the insurance industry, lest another financial crisis shortchange insurers out of funds they need for future claims obligations. The National Association of Insurance Commissioners has also begun a study on captives this year. The Department of Financial Services has sent letters to 80 life insurers requesting information about their financial arrangements with captives.
For the full story.