The use of captives by U.S. life insurers has increased 28% to $172 billion in 2012 from $134 billion in 2007, according to Moody's calculations.

While MetLife may insist its use of captive reinsurers is the best way to deal with an overly penal regulatory code, the insurer's actions appear to indicate a concession. On May 21, MetLife said it would bring variable annuity guaranteed product liabilities back onshore, where such claims would face a higher regulatory burden.

"The attention placed on captives, not only by New York, but also by the National Association of Insurance Commissioners , will likely be a positive development that will lead to more disclosure of transactions with captives," Moody's Robinson concludes.

-- Written by Antoine Gara in New York

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