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Press Release

July 31, 2013

Contact: Matt Anderson, 212-709-1690


Benjamin M. Lawsky, Superintendent of Financial Services, today announced that for the first time a private equity firm has agreed to an enhanced set of policyholder safeguards in an acquisition of an annuity company, which will help better protect retirees and others receiving annuity payments. Recently, the New York Department of Financial Services (DFS) has highlighted a spike in private equity firms moving into the annuity business. This trend raised concerns since private equity firms typically have a more short-term oriented business model than traditional insurers, and the annuity business is focused on ensuring long-term security for policyholders.

Guggenheim Partners LLC1 has agreed to put in place a set of heightened policyholder protections as part of its planned acquisition of Sun Life Insurance and Annuity Company of New York (“Sun Life New York”). These policyholder protections include heightened capital standards; the establishment of a separate, additional “backstop” trust account dedicated to further safeguarding policyholder claims; enhanced regulatory scrutiny of investments, operations, dividends, and reinsurance; and other strengthened disclosure and transparency requirements.

Given that Guggenheim has agreed to these heightened policyholder protections, – which were requested by DFS – the Department is approving their application to acquire Sun Life New York.

Superintendent Lawsky said: “These new protections will provide the needed security that retirees who purchased annuities deserve, while also allowing this transaction to move forward. We’re pleased that Guggenheim worked with us in good faith to address the concerns we raised and put in place strong protections for policyholders. These policyholder protections can and should serve as a model set of guardrails for addressing the emerging trend of private equity firms seeking to enter the annuity business. Other non-traditional insurance industry investors asking us to approve similar transactions are going to have to step up and clear a high bar for protecting policyholders.”

The key heightened policyholder protections to which Guggenheim agreed include:

  • Heightened Capital Standards. Guggenheim will maintain Sun Life New York’s Risk-Based Capital Levels (RBC Levels) at an amount not less than 450 percent. (Capital serves as a buffer that insurers use to absorb unexpected losses and financial shocks – better protecting policyholders.)
  • Backstop Trust Account. Guggenheim will establish a separate backstop trust account totaling $200 million to provide additional protections to policyholders above and beyond the heightened capital levels. If Sun Life New York’s RBC levels fall below 450 percent, the funds in the backstop trust account will be used to replenish (“top up”) Sun Life New York’s RBC levels to at least 450 percent. The $200 million in the trust account will be held separately from other Sun Life New York funds for at least seven years and dedicated to the sole purpose of protecting policyholders.
  • Enhanced Regulatory Scrutiny of Operations, Dividends, Investments, Reinsurance. Any material changes to Guggenheim’s plans of operations of Sun Life New York, including investments, dividends, or reinsurance transactions will require the prior written approval of DFS.
  • Stronger Disclosure and Transparency Requirements. Sun Life New York will file quarterly RBC level reports to DFS – rather than just the annual reports required under New York Insurance Law. Additionally, the insurer will disclose to DFS necessary information concerning corporate structures, control persons, and other information regarding the operations of the company.

1 Delaware Life Holdings, which is acquiring Sun Life New York, is affiliated with Guggenheim Partners.

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