NU Online News Service, Dec. 14, 2:19 p.m. EST
The Federal Deposit Insurance Company has proposed a rule clarifying that a mutual insurance holding company qualifies as an “insurance company” under the Dodd-Frank act, and thus is not subject to the FDIC's orderly liquidation authority.
Matt Brady, a spokesman for the National Association of Mutual Insurance Companies, says the issue was heading off a potential problem in the future. He notes that mutual holding companies do not technically reach the definition of “insurance company” under the Dodd-Frank act, yet both architects for which the law is named have said they never intended the act to apply to mutual holding companies.
According to a summary of the proposed rule posted to the Federal Register, “The Proposed Rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company. The Proposed Rule is intended to harmonize the treatment of mutual insurance holding companies…with the treatment of such companies under state insolvency regimes.”
In a statement, NAMIC says the proposed rule means mutual insurance holding companies would remain under the regulatory jurisdiction of the states.
“The FDIC is right to propose that mutual insurance holding companies continue to be under the jurisdiction of state regulators, and not treated separately from other insurance companies,” Charles M. Chamness, president and CEO of NAMIC, says in the statement. “NAMIC has been advocating against duplicative and unnecessary regulation since Washington began debating its response to the 2008 financial crisis, and the FDIC's proposed regulation is consistent with our view.”
The FDIC says it is seeking comments on the proposed rule regarding the proposal itself and any language that should be added or clarified.
Comments must be received by Feb. 13, 2012, the FDIC says, and may be submitted via the agency's website.
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