UPDATE 1-NY regulator targets buyout firms' focus on annuities-sources
* Lawsky focusing on Sun Life, Aviva transactions-sources
* Concern over private equity firms' oversight
July 16 (Reuters) - New York's top financial regulator is examining whether to let two insurers owned by private equity firms buy annuity businesses, people familiar with the matter said, perhaps imposing rules to cut potential risks to policyholders.
The rules could reduce the attractiveness of such deals for buyout firms.
One review focuses on a proposed $1.35 billion purchase by Guggenheim Partners' Delaware Life Holdings LLC affiliate of Canada's Sun Life Financial Inc's U.S. annuity business, the people said on Tuesday.
The other centers on a $1.55 billion purchase by Athene Holdings Ltd, which is funded by an affiliate of Apollo Global Management LLC of the U.S. annuity business of Britain's Aviva Plc, the people said.
Benjamin Lawsky, the department's superintendent, in an April speech said he was concerned about an emerging trend of private equity firms buying annuity businesses.
A fixed annuity is an insurance contract that guarantees an investor a minimum monthly payment.
Many insurers are trying to get out of the annuity business because profits can be hard to come by amid historically low interest rates and elevated market volatility, and as a wave of baby boomers start to enter or approach their retirement years.
Lawsky has expressed concern that private equity firms' "short-term focus" raised a risk that they might provide inadequate oversight or customer service, a concern given that annuities are often sold to senior citizens on fixed incomes.
Private equity firms are not a natural fit for the insurance business, Lawsky has said. They typically make high-risk investments, and can be successful, with failed ventures seen as the cost of doing business.
In May, the regulator issued subpoenas concerning such issues to at least five firms, including Guggenheim and Apollo, one of the people familiar with the matter said.
Lawsky's agency, the New York state Department of Financial Services, declined to comment. Guggenheim, Delaware Life, Sun Life, Apollo, Athene and Aviva were not immediately available for comment.
The focus on the Aviva purchase was earlier reported by The Wall Street Journal and Athene's chief executive told the newspaper he was cooperating fully.
Before granting approval for that purchase, Lawsky's office is discussing having Apollo meet several requirements to protect policyholders, including higher capital standards than for traditional insurers, greater disclosure, and greater clarity on who oversees the corporate structure, the person familiar said.
Aviva's U.S. operations are headquartered in Iowa. That state's insurance division will hold a hearing on the transaction on Wednesday, a spokesman for the regulator said.
A smaller New York-based Aviva unit needs Lawsky's approval.