ERISA exemption sought for MSK Insurance

The Memorial Sloan-Kettering Cancer Center (MSKCC) and its indirect wholly-owned captive insurance company MSK Insurance US (MSK Insurance) have applied to the US Department of Labor (DOL) for authorisation that the prohibited transaction provisions of the Employee Retirement Income Security Act (ERISA) of 1974 do not apply to a reinsurance transaction.

The transaction involves the reinsurance of risks and the receipt of premiums by MSK Insurance from insurance contracts currently funding MSKCC’s Group Term Life (GTL) and Long Term Disability (LTD) Programs. The authorisation is necessary because MSK Insurance is an affiliate of MSKCC. 

Because of the relationship between MSK Insurance and MSKCC, such reinsurance would otherwise constitute a prohibited transaction under ERISA.

MSKCC’s Plan provides GTL and LTD benefits, and covers active and retired employees. The Plan is insured with The Prudential Insurance Company of America and First Unum Life Insurance Company respectively. Under the transaction, Prudential and Unum will continue to insure Plan risks. However, Prudential and Unum will reinsure up to 100% of the risks with MSK Insurance. The Plan Administrator has determined that the transaction is in the interest of the participants and beneficiaries because of benefit improvements that will be provided to them. The authorization by the DOL will be subject to the conditions described below and set forth in more detail in Exhibit A.

The reinsurance agreement is simply an internal arrangement between MSK Insurance, Prudential and Unum. Prudential and Unum will continue to insure the benefits provided to clients under the Plan including the benefit improvements.

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