FED is extending comment period for the proposed rule establishing risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities. The comment period for the proposal is being extended from December 23, 2019 to January 22, 2020. An extension of the comment period will provide additional opportunity for the public to consider the proposal and prepare comments, including to address the questions posed by FED in the proposal.
Under the proposed framework, known as the Building Block Approach or BBA, holding companies significantly engaged in insurance activities would be required to aggregate their state-based capital requirements into a consolidated requirement. The Building Block Approach accounts for risks that are specific to the business of insurance and is different from the calculations used for bank capital requirements. However, the minimum standard under the Building Block Approach would be comparable to one of the key measures of bank health, the minimum total capital ratio, which is set at 8% for banks. The proposal would establish both minimum requirements and a buffer on top of the minimum. The proposal would also revise reporting requirements for depository institution holding companies significantly engaged in insurance activities.
FED proposes to implement a new reporting form for use in the Building Block Approach. The proposed reporting form, titled “Capital Requirements for Board Regulated Institutions Significantly Engaged in Insurance Activities” (Form FR Q-1), and instructions focus on information needed to perform the Building Block Approach calculations. The proposed Form FR Q-1 is not intended to be exhaustive in terms of addressing supervisory needs other than the needs for the Building Block Approach. The vast majority of the information reported to FED through the proposed reporting form would not be public. The information that FED proposes to make public would consist of the building block available capital, building block capital requirement, and Building Block Approach ratio for the top-tier parent of an insurance depository institution holding company’s enterprise. The proposed effective date for the reporting form is January 2021.
Comment Due Date: January 22, 2020
Keywords: Americas, US, Banking, Insurance, Building Block Approach, FR Q-1, Capital Requirements, Reporting, FED
Previous ArticleFINMA Identifies Key Risks in the Financial Sector in Switzerland
Next ArticleOSFI Sets Domestic Stability Buffer Level at 2.25%
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.