Nine insurers from around the globe have been deemed as posing
risk to the global financial system by a panel of the Group of 20
leading economies.
In the U.S., American International Group Inc. (AIG), MetLife
Inc. (MET) and Prudential Financial Inc. (PRU) made the
long-awaited list of the Financial Stability Board, which is
coordinating global efforts to reduce the risk of financial
calamity.
In addition to those three, the list of so-called Global
Systemically Important Insurers includes five European insurers and
one Chinese company. Those are Allianz SE (ALV.XE), Assicurazioni
Generali SpA (G.MI), Aviva PLC (AV, AV.LN), Axa S.A. (CS.FR), Ping
An Insurance (Group) Company of China, Ltd. (2318.HK, 60138.SH) and
Prudential PLC (PUK, PRU.LN).
All are subject to higher capital requirements and other
to-be-determined conditions. For the U.S. ones, specific
requirements haven't yet been spelled out.
"A sound capital and supervisory framework for the insurance
sector is essential for supporting financial stability," said Mark
Carney, chairman of the FSB, in a statement.
Earlier this year, AIG was named systemically important by a
federal panel in the U.S., in a move the insurer--the recipient of
one of the biggest government bailout packages during the 2008
financial crisis--didn't challenge.
Prudential Financial was proposed for the label by the same U.S.
panel, the Financial Stability Oversight Council, but the Newark,
N.J.-based insurer is challenging the designation.
MetLife on Tuesday was moved into an earlier stage of the
council's review process.
"AIG looks forward to working with our international, federal
and state regulators to develop a regulatory framework for large
global insurers that is both robust and consistent," an AIG
spokesman said Thursday.
In a statement, Prudential Financial said its "expectation is
that the FSB will rely on regulators in the United States to
implement G-SII policy measures for U.S.-headquartered companies.
Prudential will remain engaged at both the global and domestic
level on developing regulatory standards that are beneficial to
consumers and preserve competition within the insurance
industry."
MetLife confirmed that it had been notified of its Group of 20
designation. "We are reviewing the proposed policy measures for
G-SIIs," a spokesman said.
The International Association of Insurance Supervisors, which
worked with the Group of 20 panel on a methodology for assessing
insurers and has proposed policy measures for them, noted in
materials on its website Thursday that potential for systemic risk
increases "where insurers significantly deviate from the
traditional insurance business model and particularly where they
engage in non-traditional insurance or non-insurance"
activities.
The supervisor group also noted that "for most lines of business
there is little evidence of traditional insurance either generating
or amplifying systemic risk within the financial system or in the
real economy."
The Basel, Switzerland-based Financial Stability Board was
established to coordinate the work of national financial
authorities and international standard-setting bodies, according to
its website. It brings together national authorities responsible
for financial stability in 24 countries and consults with many
other dozens of other jurisdictions through regional groups.
Write to Leslie Scism at leslie.scism@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires