NEW YORK—While American International Group's CEO touted the advantage of being designated a systemicallyimportant financial institution the CEO of W.R. Berkley Corp. wasnotably less enthusiastic about insurers getting thedesignation.

“I actually feel sorry for them,” says William R. Berkley,chairman and CEO of Berkley Corp., who joined AIG President and CEORobert H. Benmosche for a panel discussion at the Standard& Poor's Rating Service 29th Annual Insurance Conference onJune 5.

Berkley was responding to an audience question about insurersbeing designated systemically important financial institutions(SIFI). He explained that for a short time when W.R. Berkleywas a bank holding company it had “an informal” relationship withthe Federal Reserve.

But the relationship was enough to prompt Berkley to “tell myboard that my number one objective for the year was to get awayfrom being a bank holding company.” W.R. Berkley Corp. heldinterest in InsurBanc which it sold to Connecticut Community Bank in April.

He says Benmosche “accepts his fate”–as a large holdingcompany explaining why there are advantages for AIG beingdesignated as SIFI–but having federal oversight “is a realpain.”

“It makes your life very difficult; you have less flexibility;you can't turn on a dime—no matter how good you are,” says Berkley.“It makes more cumbersome demands on the business. It takes away alot of risk, but makes it harder to run.”

He says Benmosche's job will be more difficult and complex withanother layer of regulation, but “with luck, over a period of a fewyears,” there may be less regulation. However, banking regulatorsare “persistent” and see risk in a different way from insurers. Hehopes eventually insurers will get through to bank regulators, thatunder the law insurance companies are different.

“You can watch what we do, but we are not the same as banks,”says Berkley, adding that he believes the designation puts thesecarriers under a competitive disadvantage.

Benmosche points out that AIG has improved substantially overwhere it was in 2008 when it required a government bailout and ithas met and surpassed the government's financial stress tests.However, if there is a disadvantage it will be for AIG'sshareholders should regulators require the company to put up morecapital.

He says the carrier is planning overseas expansion, primarily inAsia, where a new generation of buyers is coming to appreciate thefinancial securities offered by accident and health, and lifeinsurance.

“It's a huge opportunity and market,” says Benmosche.

The third panelist, Gregory C. Case, president and CEO ofinsurance broker Aon plc, says insurers want regulation becausethey want to “get it right,” but it cannot be the same for banksand insurers. If they are, he asks, will the added demands forcapital then increase the cost of insurance? It is a question thatcuts across the industry not only in the U.S. but on aninternational scale as regulators look to get these issues“proportionally right,” he says.

Berkley says he worries about over regulation of business,because, “if you have regulation that is so strong that no one canfail, you don't have any real competition. I think that is the realproblem.”