Life Insurer Lobby Met Fed to Discuss Dodd-Frank Capital Rules

Federal Reserve Board staff met with the American Council of Life Insurers as the trade group pushes its proposal to exclude the industry from new capital requirements designed for U.S. banks.

ACLI representatives led by Senior Vice President Julie Spiezio met with Fed staff earlier this month to discuss “the challenges of applying a bank-centric capital framework” on insurance companies through the Dodd-Frank law that overhauled the financial industry last year, the central bank said in a statement on its website.

MetLife Inc. (MET) and Prudential Financial Inc. (PRU), the biggest U.S. life insurers, use the ACLI to promote their agendas in Washington. Dodd-Frank, designed to prevent a repeat of the 2008 financial crisis, subjects insurers to greater federal scrutiny. The ACLI is pressing the Fed to exclude insurers from some bank rules and instead rely on capital-adequacy calculations provided by the industry’s state regulators.

“In addition to being highly inappropriate, it makes no regulatory sense to apply these bank rules to insurers,” Spiezio said in a Feb. 14 letter to regulators including Fed Chairman Ben S. Bernanke. “The liabilities and obligations of the two types of entities are very different, and so their capitalization and reserving requirements must be very different as well.”

During the March 8 meeting, the ACLI discussed Dodd-Frank’s so-called Volcker Rule, which prohibits banks from betting their capital for their own accounts, and the Collins Amendment, a provision that bars lenders from counting trust-preferred securities as part of their capital cushions, according to the Fed.

MetLife Chief Executive Officer Robert Henrikson, 63, praised the ACLI in October for its work in shaping new rules and urged executives of rival carriers to continue to press regulators as Dodd-Frank gets implemented. The ACLI represents companies that account for more than 90 percent of the assets and premiums of the life insurance and annuity industry, according to its website.

To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net;

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