The NAMIC letter says the CFOs' comments “share the concerns expressed by the Financial Service Roundtable and the American Bankers Association in their comment letter on the issue.” Included in the FSR's membership are a number of large, global insurance companies. The ABA members include some banks which operate large insurance brokerages.

The Fed is proposing the rules as the successor to the Office of Thrift Supervision. The OTS was phased out and its responsibilities shifted to the Fed and the Office of the Comptroller of the Currency through the Dodd-Frank financial services reform law.

That decision was made based on testimony by the National Association of Insurance Commissioners, amongst others, that the OTS, as the consolidated regulator of American International Group, was responsible for supervising AIG's Financial Products Group, not state regulators.

An amendment to the legislation sponsored by Sen. Susan Collins, R-Maine, specifically mandates consolidated supervision of all non-banks which operate thrifts by the Fed.

The Fed was forced to bail out AIG in Sept. 2008 after learning that AIG could not afford to meet margin calls on $2.77 trillion in credit-default swaps AIGFP had issued to insure mortgage-backed securities of various qualities held by U.S. securities firms.

At one point in 2009, the Fed had advanced in loans or credits approximately $182 billion in cash to keep AIG afloat.

Currently the U.S. position in AIG is being phased out.

In its comments, NAMIC says the Fed has proposed a banking standard “that bears no meaningful relationship to the allocation of capital and use of leverage in the insurance world.”

The NAMIC comments say the Collins amendment authorizes the Fed to impose a framework that takes into account insurance-based capital requirements. “However, the Fed has proposed implementing the Collins Amendment in a rigid bank-centric manner,” the letter contends.

“As a result, insurers are confronting tremendous and needless added uncertainty concerning the rules of the road governing capital allocation and how capital should be deployed in the future.”

Moreover, the NAMIC letter says, the “proposals represent a sea change for insurance SLHCs [savings and loan holding companies]. NAMIC says insurance SLHCs “would be subjected to an expensive and onerous new quantitative capital regime without fulfilling the intended purpose of assessing the safety and soundness of the SLHC.

“As NAMIC has consistently pointed out, there are fundamental differences between the capital structures and business models of insurers and banks. – the different regulatory structures, different underlying business purpose, and the relationship to consumers,” the letter adds.

The Nationwide letter says the company is concerned “that the application of an undifferentiated, bank-centric capital framework to all organizations with a depository institution, without regard to their predominant line of business or their unique set of risks, raises safety and soundness concerns for SLHCs, makes it increasingly difficult for SLHCs to serve as a source of financial strength to their depository institution subsidiaries…and increases the threat of systemic risk in the U.S. financial system.”

The Nationwide letter was signed by Mark R. Thresher, executive vice president and chief financial officer.

The CFO letter also suggests that because insurance companies that have savings and loans have not been regulated by the Fed previously, new capital requirements should not be applicable until July 15.

Furthermore, the letter says that the proposed rules would require the implementation of GAAP accounting standards by Jan. 2013, “which is simply infeasible for insurers not currently reporting under GAAP (Generally Accepted Accounting Principles).

In conclusion, the coalition of chief financial officers asked the Fed, the Federal Deposit of Insurance Corporation and the OCC “to further study the impact of the proposal and engage the industry directly to arrive at final regulations that both strengthen the economy and appropriately accommodate the business of insurance.”

In separate comments, the American Insurance Association says it is more appropriate to apply the risk-based capital system of insurance financial regulation to firms that are engaged in the insurance business “than to incur the adverse consequences from trying to shoehorn those companies into capital standards that were developed for the unique features of banking organizations.”

Therefore, for those companies with property and casualty insurance affiliates that would otherwise be subject to the proposed rules, the AIA “strongly urges” that the agencies “ring-fence the insurance companies and allow them to continue to be subject to state risk-based capital standards in lieu of the proposed rules,” the AIA says in a letter signed by J. Stephen Zielezienski, senior vice president & general counsel.