The current selection process by the Financial Stability Oversight Council (FSOC) will be ongoing, not a one-time thing, according to the chief advisor to Deloitte Insurance Group.

After completing its current review of U.S. insurers as non-bank systemically important financial institutions (SIFI), the FSOC is likely to next turn its attention to large international insurers doing business in the U.S., according to Deloitte's Howard Mills, who is a former New York insurance commissioner.

"Although they are not headquartered in the U.S., they do most of their business in the U.S., too much to not to be a U.S. SIFI," he said. "The FSOC will have to deal with that question."

He says the first companies to be so examined are likely to include Prudential Plc of Great Britain, Allianz SE of Germany, Assicurazioni Generali S.p.A., Aviva plc of Great Britain, AXA S.A. Inc. of France and Ping An Insurance Group Company of China, Ltd.

These companies, as well as American International Group (AIG), Prudential Financial and MetLife, were cited last week as global SIFIs by the G-20's Financial Stability Board.

In the U.S., the FSOC recently designated AIG as a SIFI and seeks to designate Pru Financial as a SIFI. It has also moved MetLife to the third stage of such designation.

Pru Financial is challenging the FSOC, and a hearing on the issue was held by the FSOC this week. MetLife said it would also challenge such a designation.

In other comments, Mills said that "the fact is that the insurance industry is unanimous in its view that no insurer should be a SIFI."

However, he said there is "no question that the industry is heading toward a dual regulatory environment."

"The U.S. will continue to have state regulation, with some degree of federal involvement through the Federal Insurance Office or other agencies…that is certain to lead to greater challenges for the industry to remain in compliance, will drive up cost of compliance programs and will be a major challenge for the industry going forward."

For example, the industry is watching for the report from the Federal Insurance Office (FIO), which is 19 months overdue.

"What will the FIO report say, and will it suggest greater involvement by the federal government in insurance regulation going forward?" Mills asked.

Mills said that for life insurers, there is currently "a very challenging regulatory environment."

At the state level, there are ongoing investigations about unclaimed property, use of captives and the ongoing issue of principles-based reserving, or PBR.

"That is something that has been working through the NAIC for a number of years," he said. "It is aimed at providing greater flexibility in capital requirements."

At the same time, Mills said the use of PBR is "in question because New York and California are questioning whether they want to accept PBRs, and the NAIC is currently debating whether to approve a model act regarding PBRs."

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FSOC Likely to Turn to International Insurers in the U.S. as Next Possible SIFIs

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