NY Discovers $48B In 'Shadow' Life Insurance Captive Deals

Law360, New York (June 12, 2013, 1:06 PM EDT) -- A New York regulator said Wednesday it has uncovered $48 billion in dubious transactions that have allowed life insurers to sidestep the state's requirements for setting aside funds to cover policyholders' claims, as it called for an immediate nationwide moratorium on the transactions.

During an investigation that lasted nearly a year, the New York Department of Financial Services said it found that life insurers and their affiliates were seizing on a loophole to divert these reserves to other states and jurisdictions offshore with more relaxed reserve...
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