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February 02, 2021 at 03:16 PM
New York state regulators have imposed a $12 million fine on a large financial services company in connection with allegations that the company used the wrong subsidiary to handle a pension risk transfer deal.
The New York State Department of Financial Services fined American General Life Insurance Company and its parent, American International Group Inc. (AIG).
New York regulators said Monday that AIG violated state law by having subsidiary American General Life employees, who not authorized to sell group annuities in New York state, handle certain communications. These included communicating with pension risk transfer (PRT) prospects and PRT customers and with group annuity plan participants in New York state.
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AIG has another subsidiary, The United States Life Insurance Company in the City of New York, that is authorized to do business in New York state. AIG has agreed, through a consent agreement with the New York department, to transfer the handling of transactions related to pension risk transfers to U.S. Life.
New York officials are not alleging that AIG or American General violated other rules, or that American General Life wrote the group annuities used in the pension risk transfer arrangements.
Under New York state law, “an unauthorized insurer may not make telephone calls, provide access to web portals (save for limited circumstances …), or engage in any other manner of communication with any person in New York from outside New York, other than by mail,” according to the consent order. “In addition, an unauthorized life insurer may not solicit, negotiate, or sell group annuity contracts (“GACs”) through in-person meetings, telephone calls, mail, emails, access to web portals, or any other form of communication from a location in New York.”
