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.

At the same time, the MetLife letter appears to stress the fact the company is concerned that it will be designated SIFI only because it engages in “nontraditional insurance activities.”

In the letter, MetLife said that, “In our view, the central point here should be an analysis of what is regulated and what regulatory gaps exist.

“We believe that the current system of oversight over the activities conducted within a regulated insurance entity is adequate,” Latrenta said.

“We make this statement based on the fact that the reserve and capital requirements, many of which are principles-based, supplemented by liquidity stress tests, have proven to be effective over the years.”

Moreover, Latrenta said, “the current system of resolution, including the existence of state guaranty funds, has and continues to provide backstop guarantees to policyholders without state or federal government assistance.”

The FSOC re-proposed the rule, first proposed last November, in response to strong criticism of the initial proposal, both within the industry, as well as by a number of members of Congress.

“ … careful analysis will show that the traditional, core activities of life insurance companies do not present systemic risk,” the ACLI letter says.

It adds that after reviewing the proposed regulation, Spezio said, “We believe the 3-stage determination process and the supporting metrics contained in the [proposed regulation] and proposed guidance reflect policymakers’ substantial recognition of this fact.”

The letter also asks that the proposed guidance on the criteria that would be used in designating an institution as SIFI should be incorporated within the proposed rule itself.