By Victoria McGrane
WASHINGTON--The Federal Reserve said Tuesday it is seeking more
data from insurance companies it oversees on how new postcrisis
capital rules could affect those firms.
The Fed sent the voluntary request to about 20 firms, a group
that includes both insurance companies organized as savings and
loan holding companies and the two nonbank insurance companies
designated as "systemically important" last year-- American
International Group Inc. and Prudential Financial Inc. The
designation draws a company into the Fed's orbit and brings with it
tougher capital, liquidity and other rules.
The Fed posted a copy of the request letter being sent to the
firms and the survey on its website.
The data will be used to study the potential impact of new
capital rules on insurers and how the Fed can tailor those rules
better for insurance companies--to the extent allowed under current
law, the Fed said.
Top Fed officials have repeatedly said they want to craft
capital rules for insurance companies that accommodate differences
in the firms from banks. But officials say they are constrained by
a provision of the 2010 Dodd-Frank law, known as the Collins
amendment, that sets a minimum capital level the Fed can't go below
in designing rules for insurers.
In the letter being sent to insurers, the Fed said its data
request is "being conducted to allow the (Fed) to better understand
how to design a capital framework for insurance holding companies
that is compliant with the Collins amendment."
Fed officials support pending legislation that would free them
of the Collins amendment, saying it would give them more
flexibility to tailor capital rules for insurers. The legislation,
which has passed the Senate, but the House packaged the legislation
with other changes in the Dodd-Frank law that don't have bipartisan
support. The insurance industry is pushing for the House to pass
the Senate bill after the November elections.
Meanwhile, the Fed is proceeding on two tracks in writing
insurance capital rules, Fed Governor Daniel Tarullo said at a
recent hearing.
On one hand, officials are thinking through what the rules would
look like if lawmakers pass the insurance fix and they had full
flexibility to take into account the insurance company business
model. At the same time, Fed officials must also think through how
the rules would look under current law, he said.
Mr. Tarullo mentioned the planned study and said with it "we
hope to actually find a few other areas where, consistent with
existing statutory requirements, we could still make some
adjustments."
Write to Victoria McGrane at victoria.mcgrane@wsj.com
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