NU Online News Service, Jan. 19, 3:10 p.m. EST

The president of the National Association of Mutual Insurance Companies says the “Volcker rule” contains “ambiguities” that could potentially inappropriately impact property and casualty insurers that have banks or thrifts.

Charles Chamness, NAMIC president/CEO, says in a statement that the law the rule implements provides for a statutory exemption for an insurance company acting on behalf of its general account.

“While it is clear that the statutory intent was not to impact insurers, the proposed rulemaking demonstrates that there remain ambiguities and potential problems for members of our industry that are affiliated with an insured depository institution,” Chamness says.

“We are working to provide comments on the Volcker Rule to the relevant agencies that will make clear that the insurance exemption should be widely construed and that with it in place, no new compliance structures be required by these insurers,” he adds.

In recent testimony before a House panel, Scott Evans, executive vice president, TIAA-CREF made comments consistent with NAMIC's concerns.

He said the problem with the proposed rule as currently structured is that it does not expressly allow the general account of an insurance company to hold an ownership interest in a “covered fund.”

In addition, Evans said, the proposal defines covered funds in a way that essentially designates all private-equity funds as covered funds.

“This is an area of concern not only to TIAA-CREF, but to many in the insurance industry since private-equity investments are widely utilized by insurers' to diversify investment portfolios, both for the benefit of their general accounts and on behalf of customers,” Evans said.

The Volcker rule is contained in the Dodd-Frank financial services reform law. It would reduce the ability of the nation's largest financial institutions to make large investments that could produce significant losses.

It was proposed by Paul Volcker, 84, chairman of the Federal Reserve Board during the Carter and Reagan administrations, while he was serving as an advisor to President Obama in 2009-2010.

In testimony, Federal Reserve Gov. Daniel Tarullo said regulators are having problems writing the rule in such a way that it didn't restrict permitted trades and yet caught prohibited ones.

He said the agency is “more than open” to alternatives to its proposed approach, saying regulators are striving to avoid complexity.

Special Reports /

Industry Reps Cite Concerns with Volcker Rule Implementation

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