Prudential Financial Inc., the second-largest U.S. life insurer, defended its use of reinsurance subsidiaries to transfer liabilities, a week after New York’s financial regulator said such deals can mask risk.

“We don’t use captives to reduce the reserves that we hold, and we don’t use captives to reduce the capital that we hold.” Prudential Vice Chairman Mark Grier said today in a presentation held by the Newark, New Jersey-based insurer. “The economic benefit to us arises from the efficiency that we get from isolating and managing certain kinds of risk in separate entities, and that’s the end of the story.”

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