Conn. Regulator Defends Hartford Surplus Decision

 

Monday, Mar 09,2009, 2:29:37 PM   Click:

Conn. Regulator Defends Hartford Surplus Decision Sean P Carr

Connecticut Insurance Commissioner Thomas Sullivan defended his handling of an approved capital relief request from Hartford Financial Services Group, his former employer.

In written comments to Birny Birnbaum, executive director of the Center for Economic Justice, Sullivan said his actions are not prohibited by the Connecticut Code of Ethics for Public Officials. It has been two years since he was last employed in the industry, Sullivan said, and neither he nor his family "have any financial interest in the insurance industry that would serve as a conflict of interest."

Sullivan's department recently agreed to permit Hartford to use nearly $1 billion for statutory capital surplus requirements (BestWire, Feb. 12, 2009). In a filing with the U.S. Securities and Exchange Commission, the insurer said the approvals allowed the company to increase the estimated statutory surplus for its life insurance companies by $987 million as of Dec. 31.

Sullivan spent 20 years in the insurance industry before taking office in April 2007, according to his official biography. He was a senior vice president of Specialty Risk Services LLC, a wholly owned subsidiary of Hartford (NYSE: HIG).

In a statement, Sullivan said he is not permitted by law to discuss details of the regulatory decision on Hartford.

"Therefore, I will abide by the law and not discuss the particulars of any company that may or may not come to the Connecticut Insurance Department requesting a permitted practice. As I have said on many occasions, I am guided by what is in the best interest of the consumer. As such, I will continue to be vigilant as I perform my regulatory duties to make sure that consumers can enjoy all of the benefits that come from a sound and competitive marketplace," he said.

Birnbaum, a National Association of Insurance Commissioners designated consumer representative, cited provisions of Connecticut statutes under which Sullivan is allowed to discuss documentation of the case if "the commissioner's opinion deems it in the public interest to disclose or otherwise make available for public inspection the information contained in such documents."

"We suggest that it is obviously in the public interest for you to provide the requested documents so members of the public can view with transparency the requests of insurers for changes in accounting and reserve rules which significantly change reported capital and reserves," Birnbaum wrote Sullivan.

When the NAIC Executive Committee ruled on a comprehensive capital and surplus relief request for life insurers last month, Sullivan cast the lone vote in favor (BestWire, Jan. 29, 2009).

Hartford earlier in February reported a $2.75 billion loss for 2008, with investment losses particularly hurting its life operations (BestWire, Feb. 6, 2009).

(By Sean P. Carr, senior associate editor, BestWeek: Sean.Carr@ambest.com)
Copyright © 2009 A.M. Best Company, Inc. Connecticut Insurance Commissioner Thomas Sullivan defended his handling of an approved capital relief request from Hartford Financial Services Group, his former employer.