A hearing will be held today by a Senate Banking Committee subcommittee on capital requirements for insurance companies now regulated by the Federal Reserve, including nonbank SIFIs and insurance companies with savings and loan holding companies (SLHCs).
The "Collins amendment," authored by Sen. Susan Collins, R-Maine, requires the Federal Reserve Board to impose certain minimum leverage, liquidity and risk-based capital requirements on holding companies, including savings and loans and systemically important nonbank financial companies it oversees.
The amendment was written in 2010, when members of Congress were focused on gaining political cover from the fallout of the financial problems of American International Group. Collins has since made clear to Fed officials that her intent was not to subject insurers to strict bank capital standards if the Fed was their prudential regulator.
According to Washington Analysis and FBR Capital Research analysts, she is expected to reiterate that position in testimony before the panel today. She is anticipated to testify that her amendment should not be used to apply bank-centric capital rules on insurance companies," FRB Capital analysts said.
"In our opinion, there is little to no support in Congress, or among regulators, for subjecting insurers to bank-like capital rules," said Ryan Schoen of Washington Analysis.
Schoen said that he believes regulators are unlikely to unveil any new insurance rules anytime soon, particularly as momentum builds in Congress to carve out insurers from Dodd-Frank capital requirements. Besides AIG, MetLife and Pru, several large property and casualty insurers, including State Farm and USAA, maintain savings and loans that are subject to Federal Reserve oversight as their consolidated regulator.
