In a strong statement, the American Council of Life Insurers (ACLI) has reiterated to federal regulators its belief that the life insurance industry is adequately regulated and does not represent a systemic risk to the financial system.
The ACLI’s letter was written in response to the Financial Stability Oversight Council (FSOC) in response to the revised proposal regarding the metrics the FSOC will use in determining whether a non-bank constitutes a so-called “systemic risk” to the system.
And, in a companion letter, MetLife said it has worked with the ACLI “to address additional areas of concern to the life insurance industry “and many of our thoughts are also expressed in the ACLI submission.”
The MetLife letter, and the fact that it worked with the ACLI on its comments on the issue, is consistent with the fact that the industry, ratings agencies and financial services officials in general believe that MetLife, Prudential Life and American International Group are the most likely insurers to be designated “SIFI,” and therefore subject to additional oversight by the Federal Reserve Board as well as state regulators.
While most of the comments in both letters are either technical or similar to those submitted in February in response to the initial proposal, two are somewhat different.
The ACLI letter was signed by Julie Spezio, senior vice president, insurance regulation and deputy general counsel.
The MetLife letter was signed by Nicholas Latrenta, executive vice president and general counsel.
First, in the ACLI letter, the industry asks that a final rule be amended “to explicitly provide that confidential notice will be given to a firm before any announcement designation is made public.”
The letter explained that, “This will allow affected companies a reasonable period to prepare public communications and any required disclosures that result from such a determination.”
The ACLI also asks that the rule be clarified to establish a procedure, which includes a public hearing, that will be used in annually reevaluating whether a non-bank should continue to be designated SIFI.
“This should include incorporation of a process by which designated firms are provided with an opportunity for hearing and submission of evidentiary material prior to the FSOC reaching any conclusion on the matter,” the ACLI letter said.