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SEC asks insurers for detail on "captives"

  • Captives are reinsurance units set up by life insurers to take on business from the parent, and, industrywide, the entities hold tens of billions of potential obligations to policyholders even as their financial disclosure and funding requirements are easier than that of the parent. For years, state regulators have raised concerns the setup is masking financial health.
  • Those in contact with the SEC over the matter include MetLife (MET), Genworth (GNW), Hartford (HIG), Protective Life (PL), and Reinsurance Group of America (RGA). In general the group says the captives are adequately funded and note the setup requires approval from state regulators where the insurer is based and from where the captive is located.
  • Protective LIfe - in a recent earnings filing - said discontinuation of the practice "could have a material adverse impact on the company's financial condition," and Reinsurance Group said it might have to increase prices.
Comments (2)
  • BuisnessUsual
    , contributor
    Comments (31) | Send Message
     
    That is the most trite excuse I have ever heard. 9 out of 10 times a company says they might have to raise prices because of government oversight, they are lying and never end up raising prices.
    30 Dec 2013, 07:50 AM Reply Like
  • jwalters99
    , contributor
    Comment (1) | Send Message
     
    These captives have been a way to avoid onerous capital requirements in home states and shield some risk information from shareholders and regulators for years. This could be meaningful to capital levels at MET, LNC. HIG, GEN, if any changes are not grandfathered.
    30 Dec 2013, 09:23 PM Reply Like
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