NAIC Easing of Insurer Rules May Be Too Late for 2008 (Update2)
By Hugh Son
January 2, 2009
Jan. 2 (Bloomberg) -- The life insurance industry's request to ease capital requirements may come too late for companies to apply the new standards to 2008 results, the National Association of Insurance Commissioners said.
"We will not contemplate making any changes that would negatively impact existing consumer protection," NAIC President Roger Sevigny said in a statement today. "The intent is to fully vet this and make sure everyone has had appropriate chance to comment," he told regulators earlier today in a conference call.
The American Council of Life Insurers is seeking relief after losses on stocks, mortgage bonds and corporate debt forced firms including Prudential Financial Inc. and Hartford Financial Services Group Inc. to slash dividends. Regulators were under pressure to act after New York eased standards last month on insurers the state oversees. MetLife Inc., the largest U.S. life insurer, said the rule change provided a $1.8 billion benefit.
The regulators and industry are still discussing rules on reinsurance accounting and the valuation of commercial mortgages, according to a Dec. 24 letter from the ACLI. The NAIC will hold a hearing on Jan. 27 in Washington to give companies, regulators and consumer groups a chance to present their positions, the statement said.
The life insurance industry had pushed for the changes to be made in time to apply to yearend 2008 financial statements. Many states follow recommendations by the Kansas City, Missouri-based NAIC, which had outlined new reserve guidelines in September to be adopted at the end of 2009. In November, as the stock slump deepened, insurers called on regulators to speed reform.
Passage of capital relief would benefit Hartford, Prudential and Lincoln National Corp., said Andrew Kligerman, an analyst at UBS AG, in a note Dec. 18. All three insurers lost at least two- thirds of their market value last year.
"We are pleased that the NAIC sees the need to act by the end of the year to address overly conservative capital and reserving standards," Bruce Ferguson, senior vice president of the ACLI, said in a statement last month. Bill Hart, a spokesman for the group, didn't immediately return a call seeking comment.
Daniela Palmieri, a Lincoln spokeswoman, and Hartford spokeswoman Shannon Lapierre didn't immediately return calls made after normal business hours.
"We have said previously we really didn't think it had any significant benefit to our company," said Bob DeFillippo, a Prudential spokesman, said in an interview today.
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