Insurance regulators step up activity
December 29, 2013 by IFAwebnews Staff
Five years after the financial crisis, insurance regulators in the U.S. and abroad are stepping up efforts to show progress toward group level supervision and capital standards, according to a new report from Fitch, “Group Capital Standards for U.S. Insurers.”
The year 2013 saw several large global insurance groups designated as “systemically important” and subject to stricter supervision and higher capital requirements at the holding company level, said Fitch.
In the U.S., there is a high degree of regulatory uncertainty caused by the designation of certain life insurers as nonbank systemically important financial institutions (SIFI), the role of the federal government in regulating insurance more broadly and various initiatives at the state supervisory level, according to Fitch.
To date, American International Group Inc. and PruIFdential Financial Inc. have been designated as nonbank SIFIs, and MetLife Inc. is currently in the final stage of the three-step review process. Insurers designated as nonbank SIFIs are expected to be regulated by the Federal Reserve Board and subject to enhanced supervision and prudential standards, according to Fitch.
While the report said it expects that SIFI-designated insurers in the U.S. and abroad will be subject to increased capital requirements and higher costs associated with increased regulatory compliance, the exact nature of the risk/capital regime remains highly uncertain and specifics surrounding implementation remain unclear. As a result, rating implications are equally uncertain.