"During the public comment period, the American Insurance Association urged the Federal Reserve Board to not apply bank-centric rules to the insurance industry," said J. Stephen Zielezienski, AIA senior vice president and general counsel, in comments consistent with the views of insurance trade groups who waged a multi-front attack via comment letters, visits with Fed officials, and by enlisting members of Congress in order to persuade federal regulators.

Zielezienski continued, "We are pleased that the board's final rule provides a temporary exemption for savings and loan holding companies that derive more than 25 percent of their total consolidated assets from insurance underwriting activities." He says AIA hopes the board will make the exemption permanent.

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said the rule "appears to rightfully acknowledge the unique nature of the business of insurance and excludes companies that are predominantly engaged in it from the greater capital requirements being placed on banks."

Grande said "Basel III capital standards that don't fit insurers have no place in insurance solvency supervision," and "any capital standards for insurers should consider risk exposures that fit the business of insurance, including asset risk, underwriting risk, interest rate risk and business risk."

 "The Federal Reserve was told that it was not Congress's intent under Dodd-Frank that federal regulators supplant state-based insurance regulation with a bank-centric capital regime. The rule appears be in accord with these requirements," Grande said.

Specifically, the board said in the final rule that, "After considering the comments received from SLHCs substantially engaged in commercial activities or insurance underwriting activities, the board has decided to consider further the development of appropriate capital requirements for these companies, taking into consideration information provided by commenters as well as information gained through the supervisory process.

"The Board will explore further whether and how the proposed rule should be modified for these companies in a manner consistent with section 171 (the Collins Amendment) of the Dodd-Frank Act and safety and soundness concern," the Fed said.