Apollo Global Management has agreed to "enhanced" safeguards for policyholders as part of Athene Holdings Ltd's planned purchase of the New York business of Britain's Aviva Plc, New York's financial regulator said on Wednesday.

Athene Holdings is funded by an affiliate of Apollo Global Management.

The new policyholder protections include higher capital standards, greater disclosure and enhanced regulatory scrutiny, the superintendent of New York's Department of Financial Services said in a statement.

The safeguards are meant to address the emerging trend of private equity firms entering the annuity business, whose shorter-term business model than traditional insurers raises concerns, said Benjamin Lawsky, the New York superintendent.

Athene Holdings plans a $1.55 billion purchase of Aviva Plc, whose U.S. operations are headquartered in Iowa.

Aviva's New York-based unit, which needs Lawsky's approval, represents less than 3 percent of Aviva's U.S. operations.

Iowa's insurance division held a hearing on the transaction last month. The state continues to review the deal and will make a decision on whether to approve it this week, according to Tom Alger, a spokesman for the Iowa insurance division.

The New York regulator insisted on enhanced policyholder protections to approve the acquisition of Aviva Life and Annuity Company of New York, which is necessary for the overall deal to move forward, according to a person familiar with the matter.

New York wanted higher capital standards because they serve as a buffer to absorb unexpected losses. Aviva New York agreed to capital levels of not less than 450 percent and a separate backstop account with $35 million.

Athene and Apollo declined comment.

Apollo is the second major firm to agree to New York's new model. Guggenheim Partners last month agreed to similar protections as part of its planned purchase of Sun Life Insurance and Annuity Company.

"When it comes to these sorts of deals, we need to ensure we are putting retirees who depend on these annuities first," Lawsky said in the statement.

(Reporting By Karen Freifeld; Additional reporting by Greg Roumeliotis; Editing by Leslie Adler)