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* Lawsky focusing on Sun Life, Aviva transactions -sources
* Concern over private equity firms' oversight
By Karen Freifeld
July 16 (Reuters) - New York's top financial regulator is examining whether to let two insurers with links to investment firms buy annuity businesses, perhaps imposing requirements to cut potential risks to policyholders, people familiar with the matter said.
The requirements could reduce the attractiveness of such deals for buyout firms.
One review by the New York state Department of Financial Services focuses on a proposed $1.35 billion purchase by Guggenheim Partners' Delaware Life Holdings LLC affiliate of Canada's Sun Life Financial Inc's U.S. annuity business, the people said on Tuesday.
The other centers on a $1.55 billion purchase by Athene Holdings Ltd, which is funded by an affiliate of Apollo Global Management LLC of the U.S. annuity business of Britain's Aviva Plc, the people said.
Before granting approval for the Aviva purchase, the regulator is discussing having Apollo meet several requirements to protect policyholders, including higher capital standards than for traditional insurers, greater disclosure and greater clarity on who oversees the corporate structure, one of the people said.
"We understand the New York regulator's concerns and we remain committed to working to address these issues," Athene, said in a statement. Athene's majority owner is AP Alternative Assets.
Benjamin Lawsky, the department's superintendent, in an April speech said he was concerned about an emerging trend of private equity firms buying annuity businesses.
A fixed annuity is an insurance contract that guarantees an investor a minimum monthly payment.
Many insurers are trying to get out of the annuity business because profits can be hard to come by amid historically low interest rates and elevated market volatility, and as a wave of baby boomers start to enter or approach their retirement years.
Lawsky has expressed concern that private equity firms' "short-term focus" raised a risk that they might provide inadequate oversight or customer service, a concern given that annuities are often sold to senior citizens on fixed incomes.
Private equity firms are not a natural fit for the insurance business, Lawsky has said. They typically make high-risk investments with failed ventures seen as the cost of doing business.
In May, the regulator issued subpoenas concerning such issues to at least five firms, including Guggenheim and Apollo, one of the people familiar with the matter said.
Lawsky's agency declined to comment. Guggenheim, Delaware Life, Sun Life and Apollo were not immediately available for comment.
The focus on the Aviva purchase was earlier reported by The Wall Street Journal.
Aviva's U.S. operations are headquartered in Iowa. That state's insurance division will hold a hearing on the transaction on Wednesday, a spokesman for the regulator said.
"Aviva is almost entirely an Iowa company," Athene said in its statement, and would comply with all regulatory and capital requirements of Iowa regulators.
The New York-based Aviva unit, which needs Lawsky's approval, represents less than 3 percent of Aviva's U.S. operations, the statement said. The company plans to merge that business with Presidential Life, Athene's larger and stronger New York company.
The merger would increase the capital reserves, eliminate the need for non-traditional financing and make the Aviva New York unit more stable, the statement said.