Insurance companies have long been regulated by state liquidation and rehabilitation schemes. Now, the FDIC has proposed a rule that would treat mutual insurance holding companies–which can’t actually engage in the business of insurance–as “insurance companies” under the Dodd-Frank Act so that they can be liquidated or rehabilitated under state law, not under federal law. There are some requirements that a mutual insurance holding company would have to meet in order to qualify, such as:
- Being subject to the insurance laws of its domicile state;
- Not being in bankruptcy;
- Having as its largest U.S. subsidiary an insurer or intermediate insurance stock holding company; and
- Limiting its investments to securities of an intermediate insurance stocking holding company, the securities of the converted mutual insurance company, or the assets and securities an insurer can hold in its state.
The rule is currently open for public comment through February 13–which means you’ll still have plenty of time to buy that last-minute Valentine’s Day card after commenting. We’ll continue to report on the evolving Dodd-Frank landscape and how it affects insurers and reinsurers, so be sure to sign up to be notified of the latest developments.