Federal Reserve to evaluate new capital framework

The US Federal Reserve Board is to begin a quantitative impact study to evaluate the potential effects of its revised regulatory capital framework for insurers.

The study will assess the effects of the framework on companies that are “substantially engaged in insurance underwriting activity”.

In July 2013, the board finalised its revised regulatory capital framework to implement the Basel III capital rules for bank holding companies, certain savings and loan holding companies, and state member banks.

Savings and loan holding companies substantially engaged in insurance underwriting activity were excluded from the framework which gave the board more time to appropriately tailor the capital rules for those firms.

“The QIS is being conducted to allow the board to better understand how to design a capital framework for insurance holding companies it supervises that is compliant with the Collins Amendment. Information collected through the QIS would allow for further exploration of areas of concern raised by commenters during the proposal stage of the revised regulatory capital framework rulemaking,” said the board.