Federal Reserve finalizes rule establishing capital requirements for insurers

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve announced Friday it finalized a rule establishing capital requirements for insurers supervised by its board.

"The final rule includes a framework, known as the Building Block Approach, that builds on existing state-based insurance requirements, accounts for risks that are specific to the business of insurance, and is different from the calculations used for bank capital requirements," it said in a statement.

The final rule, which is substantially similar to the proposal issued in September 2019, will take effect Jan. 1.

It aims to establish minimum risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities.

Under the Building Block Approach, holding companies significantly engaged in insurance activities would be required to aggregate their state-based capital requirements into a consolidated requirement, the Fed said in September 2019.