WASHINGTON—Only MetLife and Prudential Life are likely to be subject to increased scrutiny by federal regulators through new criteria unveiled Tuesday, a securities analyst said in an investment note.
Jeff Schuman of Keefe, Bruyette & Woods, also said the proposed regulation is “good news” for most large life insurers.
At the same time, Schuman was only talking about stock life insurers.
Securities analysts only cover stock insurers, not large mutual insurers such as Northwestern Mutual, Guardian Life, Mass Mutual and New York Life Insurance Company.
Large mutuals also could be subject to additional scrutiny because they have assets of more than $50 billion, the basic criteria that will determine whether an insurer will be subject to greater scrutiny as a potential “systemically important financial institution” (SIFI).
Schuman said that just because MetLife and Pru meet the threshold criteria does not mean they will ultimately be subject to regulation by the Federal Reserve Board as SIFI under the Dodd-Frank Act.
Schuman made his comments in the wake of the decision of the Financial Stability Oversight Council to re-propose a regulation that will be used in determining whether a non-bank is SIFI.
The FSOC reissued the proposal after coming under intense pressure from insurers and their supporters in Congress to disclose more specifically the qualitative and quantitative standards that will be used in determining whether an institution is systemically significant.
Under Dodd-Frank, if an insurer were to be designated as SIFI, it would be regulated by the Federal Reserve Board, which will establish the “prudential standards” the non-bank SIFIs must adhere to. SIFIs would have to register with the Fed within six months of official designation and would be subject to additional capital standards as well as other requirements.