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New York Department of Financial Services proposes stricter standards in reviewing life insurance acquisitions

The New York Department of Financial Services (DFS) is proposing to extend stricter standards to acquisition deals across the life insurance industry. These standards, which would apply to all purchasers of life insurance and annuity businesses, would include additional disclosure requirements about corporate structure and ownership and some aspects of operations, as well as heightened capital requirements to be applied on a case-by-case basis. The standards are similar to the ones used last year by DFS in scrutinising acquisitions of fixed-annuity businesses by private equity and investment firms.

Additionally, the DFS is proposing enhanced regulatory scrutiny of material changes in certain aspects of operations occurring within five years of the acquisition as well as heightened capital standards that would be applied on a case-by-case basis.

Superintendent Benjamin Lawsky stated that DFS wanted to ‘even the playing field’ and ‘strike an appropriate balance that keeps markets open to new entrants, while at the same time putting in place necessary safeguards’…

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