The US’s largest insurer, MetLife has moved to close its Cayman-based captive following accusations from the New York Department of Financial Services that the entity was obscuring risks held by the insurer.
Benjamin Lawsky, superintendent of the New York Department of Financial Services, who has been investigating the inappropriate use of captives by some insurance and reinsurance companies, praised the move saying that it will create greater transparency and oversight at MetLife.
MetLife’s Cayman-based captive, Exeter Reassurance, will be closed and operations consolidated with entities in Connecticut, Delaware and Missouri.
Commenting on the decision, Steven Kandarian CEO of MetLife said the move would "increase transparency". The deal will also help to drive down the insurer’s risk to capital ratio to close to 400 percent.
Nevertheless, MetLife continues to utilise a number of onshore captives to support its life insurance operations. Kandarian said: "We believe our use of onshore captives—which support very different types of business—is a cost-effective way to manage risk."
Addressing Lawsky’s intervention, Kandarian said the investigation had been "an important factor in our taking a closer look at our offshore reinsurance subsidiary."
MetLife, Bermuda, New York, captive insurance