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Federal Reserve to Outline Capital Requirements for Insurance Firms

U.S. insurers deemed big enough to threaten the financial system will probably face capital standards that are simpler and less costly than those imposed on Wall Street banks as the Federal Reserve will propose capital rules for insurance firms next week under its supervision and insurance companies designated as systemically risky. The Fed will seek outside comment on its plan for creating insurance industry rules mandated by the Dodd-Frank Act.

According to the Fed, companies such as American International Group Inc. (AIG) and Prudential Financial deemed important enough that their failure could threaten the broader economy would get regulations that evaluate their capital in a relatively simple set of risk categories. The Fed also commented that it plans to propose capital standards for insurers that own banks. Those firms, typically small parts of their overall companies, will receive a lighter touch, with the central bank largely deferring to measures imposed by the insurers’ existing regulators — often state agencies.

News Characteristics

Date : May 27, 2016
Region : North America
Industry : Insurance
Function : Regulation and Compliance
Sub-Function : Dodd-Frank Act