For the first time in 150 years, an insurer will be federallyregulated.

American International Group Inc. (AIG), one of the first threenonbank financial firms to be designated by the Federal ReserveBoard as a systemically important financial institution (SIFI),says it will not challenge the new label.

In a July 2 statement, the insurer says it is "already workingclosely" with the Federal Reserve Bank of New York "as ourregulator."

GE Capital says it too will accept the monikerbut Prudential Financial says it plans to fight the SIFI tag,asking the FSOC to schedule a nonpublic evidentiary hearing on itsappeal. 

A Treasury spokesperson says the FSOC anticipates givingPrudential a hearing within 30 days. FSOC is required to vote againon the matter in 40 days to finalize the designations.

For more than a year AIG CEO Robert H. Benmosche has said thecompany has been preparing for, and welcomed, the designation, andwas actively working with the Fed—a long-term relationship arisingout of the financial crisis when AIG needed a government bailout tobe saved from collapse.

In February Benmosche said, "We're running the company as if wewill be [designated a SIFI]." More recently, in June, the CEO said, "This has been a long preparation time and theFed has been with us now since September of last year," whengovernment ownership of AIG fell below 50 percent and theFed began regulating its thrift, which is based in Wilton,Conn.

A month ago the two insurers and GE Capital were informed ofthe FSOC's proposed determination that they are systemicallyimportant financial institutions. The companies were given 30 daysto choose to accept the designation or challenge it.

The nonbank SIFIs would join banks that have earned the samelabel: Citigroup Inc., J.P. Morgan Chase & Co. and Bank ofAmerica Corp., as well as a several payment and clearing firms.

Any company designated as systemically important could besubject to higher capital levels and regular "stress tests" toensure they can absorb losses, though the specific capital rulesfor insurers are far from complete.

Again, Benmosche appears ready. During the same June interviewhe said higher capital standards were warranted given the 2008financial crisis and AIG would "adapt our earnings targets to haveslightly more capital."