(Bloomberg) — Prudential Financial Inc., the second-largest U.S. life insurer, said the New York Department of Financial Services told the company that it may not be holding enough reserves to back some savings products, known as variable annuities.
The regulator “notified us that it does not agree with our calculation of statutory reserves,” Newark, New Jersey-based Prudential said today in a filing with the Securities and Exchange Commission. “We are currently in discussions with the NYDFS regarding the proper level of statutory reserves.”
The New York regulator, led by Benjamin M. Lawsky, has been scrutinizing insurers’ reserves to make sure the companies have enough funds to meet future payouts. Lawsky called for tighter rules for some products and proposed a moratorium on the use of transactions by insurers with affiliated companies that can mask risk.
Prudential said today that if it’s required to bolster reserves, “our ability to deploy capital held within our U.S. domestic insurance subsidiaries for other purposes could be affected.”
Bob DeFillippo, a Prudential spokesman, declined to comment. Matt Anderson, a spokesman for the New York regulator, had no immediate comment.