Athene Holding has responded to a regulatory notice from the California Department of Insurance (CDI) that has proposed fines and the temporary closure of its subsidiary, Athene Annuity and Life Company, for allegedly failing to meet California service standards for around 50,000 life insurance policies.
The CDI said that, since 2016, it has received over 100 consumer complaints related to administration issues on a set of California life insurance policies that were reinsured to Accordia Life and Annuity Company by Athene Annuity and Life Company, formerly known as Aviva USA.
According to the notice, Athene’s acquisition of Aviva USA was pending when, in May 2013, Accordia’s parent company, Commonwealth, agreed to assume responsibility for a $10 billion book of 500,000 life insurance policies from Aviva USA, 50,000 of which were issued to Californians.
During the system migration process, which was administered by third party sub-contractor Alliance-One Services, the policies were placed in a ‘restricted status’, meaning they could not be administered electronically, which led to a number of processing issues. Officials say hundreds of these policies currently remain restricted.
The CDI alleges that, as a result, Accordia failed to send annual policy reports, prevented policyholders from paying premium bills or receiving policy benefits, and demanded lump sum payments for backlogged premiums on policies eventually changed from restricted status.
Additionally, it accused Athene of failing to carry out the life insurance contracts in good faith, and called on California Insurance Commissioner Dave Jones to suspend Accordia and Athene’s ability to conduct business in the state for one year, impose fines, and issue a cease-and-desist order.
Athene has now stated that it believes all alleged administration issues to have arisen from Accordia and Alliance-One’s conversion of the policies from the legacy Aviva systems to Alliance-One systems.
It maintains that Accordia and its affiliates thus have financial responsibility for the block and are subject to any administrative service requirements, including compliance with applicable law.
The company’s statement also claimed that its agreements with Accordia provide for indemnification to Athene, including for administration issues, and that the allegations do not involve its new business, which is administered under separate administrative systems and procedures.
Athene added that it fully intends to work with the CDI to resolve the matter appropriately.
