FED Extends Consultation Period for Capital Requirements for Insurers
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.
Related Links
Comment Due Date: January 22, 2020
Keywords: Americas, US, Banking, Insurance, Building Block Approach, FR Q-1, Capital Requirements, Reporting, FED
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
FINMA Identifies Key Risks in the Financial Sector in SwitzerlandNext Article
OSFI Sets Domestic Stability Buffer Level at 2.25%Related Articles
APRA Proposes to Increase Transparency of Banking Data
APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
US Agencies Finalize Interim Final Rules Issued Amid Pandemic
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
EIOPA Consults on Use of Risk Mitigation Techniques Under Solvency II
EIOPA is consulting on a supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings.
EC Deems UK Framework for CCPs Temporarily Equivalent to EMIR Rules
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
ESMA to Recognize Three Central Counterparties from UK
ESMA announced that it will recognize three central counterparties (CCPs) established in the UK as third-country CCPs, from January 01, 2021.
PRA Publishes Version 02.04 of PRA110 Liquidity Metric Monitor Tool
PRA published Version 02.04 of the PRA110 liquidity metric monitoring tool (PRA110 LMM tool).
BoE and FCA Encourage Switch to SONIA in Interest Rate Swap Markets
BoE and FCA are supporting and encouraging liquidity providers in the sterling swaps market to adopt new quoting conventions for inter-dealer trading based on SONIA, instead of LIBOR, from October 27, 2020.
Bundesbank Updates Supporting Information for SHS Reporting
Deutsche Bundesbank published special schema files for securities holdings statistics (SHS), along with a document on the XML format description.
LEI ROC Confirmed as Governance Body for OTC Derivatives Identifiers
FSB confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System (GLEIS) as the International Governance Body for the globally harmonized identifiers used to track over-the-counter (OTC) derivatives transactions, with effect from October 01, 2020.
FCA Consults on Regulation of International Firms in UK
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
