"NY: NAIC Reserving Law A Surplus Giveaway"
Original Article by Mary Williams Walsh of the New York Times:Deal Book
Several large life insurers are going to have to set aside a total of at least $4 billion as New York regulators believe they have been manipulating new rules meant to make sure they have reserves to pay out claims.
The situation has developed as insurance companies believe that states’ regulations are forcing them to hold too much money in reserve. Many of them have engaged in secretive transactions to artificially bolster their balance sheets, often through shell companies in other states or countries. Regulators have struggled to find a solution that all 50 states can agree on and decided to test new rules.
According to a letter from Benjamin M. Lawsky to his fellow state insurance regulators, he said the test, which started in 2012, showed that the new framework did not work and was, in fact, making the “gamesmanship and abuses” in the industry even worse.