The US Department of Labor (DOL) has proposed a prohibited transaction exemption that would permit Memorial Sloan Kettering Cancer Center (MSKCC) to utilize a captive insurer for reinsuring pension risks.
According to a notice published in the Federal Register, the proposed exemption would allow MSK Insurance US Inc, a subsidiary of MSKCC, to reinsure risks and receive premiums associated with a single premium group insurance contract issued by an unrelated fronting insurer.
According to a report from AM Best, Memorial Sloan Kettering had 29,732 employees and generated approximately $6.63 billion in operating revenue, the DOL stated. The cancer center’s pension plan, which was closed to new enrollments in December 2012 and had future benefit accruals frozen in 2020, covered 8,263 participants and held $1.35 billion in total assets.
The DOL is considering granting this exemption under the authority of the Employee Retirement Income Security Act (ERISA). The notice indicated that MSKCC is expected to benefit financially from the exemption, with an estimated value of approximately $126.4 million. The exemption would require MSKCC to allocate the majority of this benefit to plan participants and beneficiaries through a uniform percentage increase in their monthly retirement benefits.
The DOL has set an August 23 deadline for submitting written comments and requests for a public hearing on the proposed exemption.
In other recent developments, nine life insurance trade groups have filed a joint lawsuit against the DOL, seeking to overturn its fiduciary rule, which they argue would limit consumers' access to retirement investment advice.
The lawsuit, filed on June 4, includes plaintiffs such as the American Council of Life Insurers, the National Association of Insurance and Financial Advisors (including its Texas, Dallas, Fort Worth, and NAIFA-POET chapters), Finseca, the Insured Retirement Institute, and the National Association for Fixed Annuities.
What are your thoughts on this story? Please feel free to share your comments below.
