Board of Governors of the Federal Reserve System

Good afternoon and welcome to our guests who are attending or watching our meeting.

Today, we are considering two proposals related to the insurance companies subject to the Federal Reserve's oversight. The first is an advance notice of proposed rulemaking--or ANPR--on insurance capital rules to address the risks for two groups of firms: systemically important insurance companies and other, less complex companies that own both an insurance subsidiary and a bank or a savings and loan subsidiary. These groups present different risks to the financial system and the ANPR outlines two approaches to capital regulation that are tailored to their different risks.

The ANPR presents potential capital frameworks that are adapted to the unique nature of the liabilities and risks of companies significantly engaged in insurance activities. Because the ANPR is conceptual, it will allow all interested parties an early opportunity to comment before we turn to developing proposed rules. It is important to note that the frameworks in the ANPR would address all the risks posed across both regulated and unregulated subsidiaries. I believe this proposal is an important step toward capital standards that are both appropriate for our supervised insurance firms and that enhance the resiliency and stability of our financial system.

The second proposal before us today is a proposed rule that would establish a range of enhanced prudential standards for systemically important insurance companies. These standards build upon the core provisions of our consolidated supervisory framework for large domestic and foreign banking organizations, but would be appropriately tailored to the business of insurance.

Let me now turn to Governor Tarullo who led the effort to develop these two proposals.