NU Online News Service, July 11, 4:58 p.m.EDT

Moody's says a recent outline put forth by the InternationalAssociation of Insurance Supervisors (IAIS) regarding a regulatoryframework to monitor international insurers' group-wide activitiesis credit positive.

"We regard development of a common framework as a challengingprocess that will ultimately benefit insurance policyholders,creditors and other market participants," Moody's says in itsWeekly Credit Outlook, adding that IAIS's publication of theoutline is "an early milestone in a three-year effort to roll out acommon framework."

Last week, IAIS said it was releasing the Common Framework forthe Supervision of Internationally Active Insurance Groups(ComFrame) as a response to the increasing globalization in theinsurance sector combined with key lessons learned from thefinancial crisis.

ComFrame seeks to develop methods of "operating group-widesupervision of internationally active insurance groups in order tomake group-wide supervision more effective and more reflective ofactual business practices," according to IAIS's notice.

Moody's notes that the recent credit crisis showed that aproblem in one or two operating units of a diversified insurancefirm can disrupt operations in other jurisdictions and other linesof business. "In particular," Moody's notes, "certain insurers wereexposed to problems in non-insurance affiliates that havehistorically fallen outside the purview of insurancesupervisors."

IAIS's initiative, Moody's says, seeks to close such regulatorygaps.

ComFrame consists of five "modules" that range from identifyinginternationally active insurance groups to assessing theirstructure and business mix to setting minimum criteria for thesegroups to meet.

On its website, the IAIS has posted a conceptpaper on ComFrame, and the group is accepting comments on thepaper until August 31.