Board of Governors of the Federal Reserve System

The Federal Reserve Board on Tuesday announced that it will begin a quantitative impact study (QIS) to evaluate the potential effects of its revised regulatory capital framework on savings and loan holding companies and nonbank financial companies supervised by the Board that are substantially engaged in insurance underwriting activity (insurance holding companies).

In July 2013, the Board finalized its revised regulatory capital framework to implement the Basel III capital rules for bank holding companies, certain savings and loan holding companies, and state member banks. Savings and loan holding companies substantially engaged in insurance underwriting activity were excluded from the framework to provide the Board more time to appropriately tailor the capital rules for those firms. The Board has sought to determine the appropriate regulatory capital framework, consistent with safety and soundness principles, as well as section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Collins Amendment. The Collins Amendment, in part, requires the establishment of minimum risk-based and leverage requirements for firms regulated by the Board that are not less than the generally applicable risk-based capital and leverage requirements that apply to insured depository institutions.

The QIS is being conducted to allow the Board to better understand how to design a capital framework for insurance holding companies it supervises that is compliant with the Collins Amendment. Information collected through the QIS would allow for further exploration of areas of concern raised by commenters during the proposal stage of the revised regulatory capital framework rulemaking.

The Federal Reserve has contacted the insurance holding companies it supervises requesting their participation in the QIS and asking for the information submission by December 31, 2014.

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