Nine insurers identified as globally systemically important

Added 25th November 2016

The Financial Stability Board has named Aegon, Aviva, and Axa among nine global insurance firms identified as systemically important financial institutions (SIFI).

Nine insurers identified as globally systemically important

The updated list, published earlier this week in consultation with the International Association of Insurance Supervisors (IAIS), was unchanged from last year.

It also includes Allianz, American International Group, MetLife, Ping An Insurance (Group) Company of China, Prudential Financial, and Prudential plc.

SIFI status means the insurers are subject to a series of internationally agreed standards. They must:

  • show a higher capacity to absorb losses;
  • be subject to enhanced supervision; and,
  • demonstrate group-wide recovery and resolution planning, among other strictures.

MetLife challenge

In April 2016, MetLife successfully challenged being classified as SIFI by the US Financial Stability Oversight Council (FSOC).

A federal court criticised the Treasury’s FSOC for failing to consider the cost of labelling MetLife as ‘too big to fail’.

Companies classified as SIFI are deemed to be a threat to financial stability and are therefore subject to tighter regulatory controls and higher capital requirements.

At the time, Treasury secretary Jack Lew criticised the ruling: “This decision leaves one of the largest and most highly interconnected financial companies in the world subject to even less oversight than before the financial crisis.”

The Treasury stated that it will appeal the court judgment.

When contacted by International Adviser about the recent FSB announcement, a spokesperson from MetLife said: “As a life insurance company, we make long-term promises and match them with long-term assets. Far from being a source of systemic risk, this business model is a source of financial stability, especially during times of stress.

"MetLife is no longer designated as a systemically important financial institution in the United States, and believe we should not be designated as a global systemically important insurer, either.”

FSB

The FSB was established to coordinate, at the international level, the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.

It is chaired by Bank of England governor, Mark Carney. 

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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