The sale of private equity insurance encountered a road block as regulators decided to review these transactions. Regulators are concerned that insurers were taking too risky decisions that may be disadvantageous for consumers.
Superintendent of DFS, Benjamin Lawsky, aptly summed up the authorities' concerns: "The risk we're concerned about at DFS is whether these private equity firms are more short-term focused, when this is a business that's all about the long haul. That their focus is on maximizing their immediate financial returns, rather than ensuring that promised retirement benefits are there at the end of the day for policyholders."
This close scrutiny by financial regulators did not come as a surprise. The authorities placed the financial services industry under a close watch after the 2008-2009 crisis.
The probe stalled deals of and other deals such as Aviva may follow suit. According to bankers, this close scrutiny also affected insurance deals not involving annuity.
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