Systemically important insurers: Global follows US lead

July 2013
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Systemically important insurers: Global follows US lead

At a glance

On July 18, 2013, the International Association of Insurance Supervisors published a methodology for identifying global systemically important insurers.

On July 18th, the International Association of Insurance Supervisors (IAIS) published a methodology, endorsed by the Financial Stability Board (FSB), for identifying global systemically important insurers (G-SIIs) and a set of policy measures governing them. Using this assessment methodology, the FSB identified an initial list of nine G-SIIs, which includes three US firms.

This development follows the recent designations by the Financial Stability Oversight Council (Council) of AIG and Prudential as nonbank systemically important financial institutions (which Prudential is in the process of contesting), and the advancement of MetLife to the final stage of analysis before designation may be proposed (per MetLife's public disclosure).

The policy measures that will apply to G-SIIs include (i) recovery and resolution planning requirements, (ii) enhanced group-wide supervision and (iii) higher loss absorption requirements.

The key takeaways of this Financial Services Regulatory Brief are: the Council's view of which US insurers are G-SIIs has been mirrored at the FSB; their differing designation methodologies did not matter; the US G-SIIs will face more bank-centric requirements than their global competitors; and the US will continue to act first as necessary toward the next round of systemically important institution designations.

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