May 22, 2014 Newswires

ACLI Urges Immediate Passage Of Capital Standards Legislation

Targeted News Service

WASHINGTON, May 21 -- The American Council of Life Insurers issued the following news release:

A letter from the American Council of Life Insurers (ACLI), signed by 55 life insurance industry chief executives representing more than 70 percent of the industry by assets, urged Members of Congress to co-sponsor legislation that would help ensure bank-centric capital standards are not applied to life insurers.

"Only insurance-based standards are suitable for assessing and safeguarding the capital strength of insurance companies," the chief executives said in the May 20 letter. "The Fed should have the authority to design consolidated insurance capital standards that are appropriate for the insurance business model and serve the goals of prudential supervision. We urge you to co-sponsor and pass S. 2270/H.R. 4510 as soon as possible."

ACLI is strongly opposed to the application of bank-centric capital standards to life insurance companies. Section 171 of the Dodd-Frank Act, also known as the Collins Amendment granted the Federal Reserve Board new supervisory authority to regulate non-bank organizations that are affiliated with savings and loan holding companies or are designated as "systemically important financial institutions" by the Financial Stability Oversight Council (FSOC). Several life insurers fall under these new rules.

S. 2270 and H.R. 4510 would make clear that the Fed can apply insurance-appropriate standards on these insurance companies. The bills were introduced by Sen. Susan Collins (R-Maine), the author of the Collins Amendment, Sen. Sherrod Brown (D-Ohio), Sen. Mike Johanns (R-Neb.), Rep. Gary Miller (R-Calif.) and Rep. Carolyn McCarthy (D-N.Y.).

"Applying inappropriate capital standards would make it substantially harder for our companies to deliver on the promises we have made to our policyholders. We believe that the interests of insurance regulators, insurance markets, and insurance customers are best served by capital standards specifically designed for the insurance business model," the letter reads.