December 21, 2021
ACTING SUPERINTENDENT ADRIENNE A. HARRIS ANNOUNCES PACIFIC LIFE INSURANCE COMPANY TO PAY $3 MILLION FOR UNLICENSED PENSION RISK BUSINESS
PLIC Solicited Pension Risk Transfer Business Deals in New York
DFS Continues Ongoing, Industry-Wide Investigation of New York Pension Risk Transfer Deals
Acting New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris today announced that Pacific Life Insurance Company (“PLIC” or the “Company”) will pay a $3 million dollar penalty for violations of the New York Insurance Law in connection with the Company’s pension risk transfer (“PRT”) business. A DFS investigation uncovered that PLIC solicited and engaged in insurance business in New York without a license.
This penalty constitutes the third enforcement action by the Department against unlicensed insurance business in the PRT industry.
“This type of unlicensed insurance activity puts the hard-earned retirement dollars of New Yorkers at risk,” said Acting Superintendent Harris. “The Department remains committed to safeguarding the retirement assets of New Yorkers and supporting the financial stability of individuals and families, which is even more critical today as we work to revive New York’s economy amidst the ongoing pandemic.”
A PRT transaction typically involves a plan sponsor, usually an employer offering pension plan protection to its employees, who transfers some or all the assets and liabilities of a defined benefit pension plan to a life insurance company. The life insurance company then issues a group annuity contract (“GAC”), obligating itself to make benefit payments to either the plan sponsor or the plan participants.
In 2016 and 2019, PLIC bid on and won two large transactions with a New York-based sponsor, which resulted in violations of New York’s Insurance Law. As part of its agreement with DFS, PLIC will transfer the handling of transactions from PLIC to its New York-based subsidiary, Pacific Life & Annuity Company.
In September 2019, after learning that unauthorized life insurers and their representatives were operating in the PRT market, the Department issued guidance to all life insurers and insurance producers warning them of their obligations under the Insurance Law and instructing them to remediate violations.
DFS continues to actively investigate other potential violations in the PRT market and to that end is working with PLIC and other insurance companies in that market to bring the entire New York industry into compliance with New York law.
To access a copy of the consent order, please go to the DFS website.