Bermuda’s books are largely secret, so the public doesn’t know the details of what investments these companies hold. Academics and regulators have identified the ways in which financial distress at a large insurer like MetLife could ripple through the financial system. “Large insurance groups have historically had obligations to other systemically important financial firms, such as major banks,” Hunt said. “If an insurer fails and cannot honor such a contract, that could cause the other party to the contract to fail, leading to a domino effect similar to what we saw in the global financial crisis,” Hunt said.
Dave Franecki, MetLife’s director of communications, wrote in an email: “We appreciate your reaching out and exploring some of these themes.” But he declined to comment further: “MetLife will not publish on your story or 100Reporters provide interviews or commentary on related series of stories,” Franecki said.
“The business model is based on asset management fees. They significantly increase investment risk,” he added, putting more money into mortgage bonds and “more exotic types of investments.” These investments are less liquid and more volatile, he said.
Union Unite Here has warned its members’ pensions are increasingly at risk, citing more and more dependent Less liquid asset-backed securities and alternative investments to drive higher returns, use of investment management agreements with own affiliates, and reinsurance of offshore liabilities. Unite Here has signaled the risk of a systemic financial meltdown.
“In our view, this will ultimately require state, federal and international regulators to work together to protect the public from the risk of failure of large life insurers and/or contagion to their interconnected larger financial system,” Unite Here said in June. In a report, it commented to the National Association of Insurance Commissioners (NAIC), which develops guidelines for state regulators overseeing the industry.
In a September 2021 report, the NAIC Financial Stability Task Force noted that when insurers invest in affiliated companies, these companies may increase the risk of their own solvency.The same report also noted that insurers often fail to accurately disclose investments in affiliated companies.
this report, second in series The article on how Wall Street profited from the insurance industry looked at three types of venture capital that each company used to boost profits, based on annual reports filed with the SEC and state insurance departments, as well as collateral forms. Thomas Gerber, a licensed fraud investigator and former Mississippi Bureau of Insurance examiner who has advised the U.S. Department of Justice on insurance fraud, analyzed the documents for 100 reporters.