Risk-Based Capital

  • In June 2013, the New York Department of Financial Services ("DES") concluded a nearly year- long investigation into life insurer-owned captive insurance vehicles.1
  • Upon finding that New York-based insurers and their affiliates engaged in at least $48 billion in transactions that enabled them to reduce their reserves and artificially inflate their balance sheets by juicing their risk-based capital ratios by approximately 250%, DFS urged fellow state insurance commissioners to adopt a national moratorium with regard to future captives transactions until a fuller and more complete picture could emerge that would inform collective decision-making.  (p1)

2014 0812 - New York Department of Financial Services (Ben Lawsky) - Letter to State Insurance Commissioners, plus Lew, Mcraith (FIO)