NU Online News Service, Dec. 14, 2:19 p.m.EST

The Federal Deposit Insurance Company has proposed a ruleclarifying that a mutual insurance holding company qualifies as an“insurance company” under the Dodd-Frank act, and thus is notsubject to the FDIC's orderly liquidation authority.

Matt Brady, a spokesman for the National Association of MutualInsurance Companies, says the issue was heading off a potentialproblem in the future. He notes that mutual holding companies donot technically reach the definition of “insurance company” underthe Dodd-Frank act, yet both architects for which the law is namedhave said they never intended the act to apply to mutual holdingcompanies.

According to a summary of the proposed rule posted to theFederal Register, “The Proposed Rule clarifies that the liquidationand rehabilitation of a covered financial company that is a mutualinsurance holding company will be conducted in the same manner asan insurance company. The Proposed Rule is intended to harmonizethe treatment of mutual insurance holding companies…with thetreatment of such companies under state insolvency regimes.”

In a statement, NAMIC says the proposed rule means mutualinsurance holding companies would remain under the regulatoryjurisdiction of the states.

“The FDIC is right to propose that mutual insurance holdingcompanies continue to be under the jurisdiction of stateregulators, and not treated separately from other insurancecompanies,” Charles M. Chamness, president and CEO of NAMIC, saysin the statement. “NAMIC has been advocating againstduplicative and unnecessary regulation since Washington begandebating its response to the 2008 financial crisis, and the FDIC'sproposed regulation is consistent with our view.”

The FDIC says it is seeking comments on the proposed ruleregarding the proposal itself and any language that should be addedor clarified.

Comments must be received by Feb. 13, 2012, the FDIC says, andmay be submitted via the agency's website.