Fed Outlines New Requirements for Insurance Firms
June 03 2016 - 3:30PM
Dow Jones News
WASHINGTON—The Federal Reserve took a step toward imposing
tougher capital requirements on insurers tagged for heightened
oversight, sketching out proposals that companies can now respond
to after years of uncertainty about the process.
The Fed's proposals, however, leave key details to be determined
later, such as specific numerical capital requirements for large
insurers Prudential Financial Inc. and American International Group
Inc. U.S. regulators have tagged those two companies "systemic,"
and as such they face tougher rules than other insurers.
The proposals are set for a vote by the central bank's governing
board later Friday, after which the industry would have a chance to
comment on them.
One proposal, outlining capital rules for insurance firms under
the Fed's purview, suggests a tougher set of rules for Prudential
and AIG than for 12 insurance companies that own banks, including
State Farm Mutual Automobile Insurance Co. and Nationwide Mutual
Insurance Co. The Fed is asking for public comment on the capital
concept, after which it would publish a draft rule.
Separately, the Fed is also set to propose draft risk-management
and liquidity rules for Prudential and AIG, including requiring
that they maintain enough safe assets to cover cash flows for 90
days and that they run "stress tests" ensuring they can meet their
cash flow needs.
Those standards would likely take effect before the capital
rules, but the Fed expects that the firms will be able to meet the
new liquidity rules relatively easily, a Fed official told
reporters on a conference call, calling them existing best
practices for many firms.
Write to Ryan Tracy at ryan.tracy@wsj.com and Leslie Scism at
leslie.scism@wsj.com
(END) Dow Jones Newswires
June 03, 2016 15:15 ET (19:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
American (NYSE:AIG)
Historical Stock Chart
From Aug 2024 to Sep 2024
American (NYSE:AIG)
Historical Stock Chart
From Sep 2023 to Sep 2024