U.S. Federal Reserve Board to study potential effects of revised regulatory capital framework on insurance holding companies
Sep 30, 2014
By Wes Strickland, Esq. (above, left) and Claude Mueller (right)
The U.S. Federal Reserve Board (“FRB”) announced today, September 30, 2014, that it will begin a quantitative impact study (“QIS”) to evaluate the potential effects of its revised regulatory capital framework on savings and loan holding companies, as well as nonbank financial companies supervised by the FRB that are substantially engaged in insurance underwriting activity (insurance holding companies).
In July 2013, the FRB finalized its revised regulatory capital framework to implement the Basel III capital rules for bank holding companies, certain savings and loan holding companies, and state member banks.
Savings and loan holding companies substantially engaged in insurance underwriting activity were excluded from the framework to provide the FRB more time to appropriately tailor the capital rules for those firms. Since, the FRB has sought to determine the appropriate regulatory capital framework, consistent with safety and soundness principles, as well as section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly known as the “Collins Amendment.”
The Collins Amendment, in part, requires the establishment of minimum risk-based and leverage requirements for firms regulated by the FRB that are not less than the generally applicable risk-based capital and leverage requirements that apply to insured depository institutions.
According to the FRB news release issued today, the QIS is being conducted to allow the FRB to better understand how to design a capital framework for insurance holding companies it supervises that is compliant with the Collins Amendment.
Information collected through the QIS would allow for further exploration of areas of concern raised by commenters during the proposal stage of the revised regulatory capital framework rulemaking.
The FRB has contacted the insurance holding companies it supervises requesting their participation in the QIS and asking for the information submission by December 31, 2014.
QIS-related material published today by the FRB is accessible via hyperlink below.
- Insurance quantitative impact study cover letter
- Quantitative Impact Study Instructions for Firms Substantially Engaged in Insurance Underwriting Activities
- Quantitative Impact Study (QIS) Reporting Template
- Supplemental Response Document – Part of the QIS Materials for Firms Substantially Engaged in Insurance Underwriting Activities
- 2014 Banking and Consumer Regulatory Policy
Should you have any questions or comments, please contact Wes Strickland or Claude Mueller at Colodny Fass& Webb.
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