Apollo Global Management (Apollo) has agreed to provide a set of heightened policyholder protections as part of Athene Holding's proposed acquisition of Aviva Life and Annuity Company of New York (Aviva New York).
The New York's Department of Financial Services superintendent Benjamin Lawsky said that the protection will help better protect retirees and others receiving annuity payments.
Apollo agreed to implement the policyholder protections such as heightened capital standards; the establishment of a separate, additional "backstop" trust account dedicated to further safeguarding policyholder claims.
It will also boost regulatory scrutiny of investments, operations, dividends, and reinsurance as well as other strengthened disclosure and transparency requirements.
Superintendent Lawsky said, "We've worked to build a new model for policyholder protections that will help address the emerging trend of private equity firms and other investment companies entering the annuity business."
In December 2012, UK-based insurer Aviva has agreed to sell its US life and annuities business and associated asset management operations Aviva US to Bermuda-based Athene, in a transaction determined at $1.8bn.
The deal, however, will not include Aviva Investors' North American asset management businesses, which are focused on third parties, and other Aviva assets outside of the US.
Apart from reducing its credit risk exposure by nearly 25%, the deal will boost its pro forma economic capital surplus coverage ratio by 17% points to 165%.
Goldman, Sachs & Co and Morgan Stanley and Co International are serving as financial advisers to Aviva on the deal.
Athene, which operates as a life insurance holding company, is focused on the retirement market and offers fixed and equity indexed annuities through its subsidiaries.
Serving 43 million customers, Aviva delivers life insurance, general insurance and asset management businesses, savings and investment products.
