Comments due on proposed Fed risk-based capital requirements for holding companies with insurance activities

The Federal Reserve Board has published a proposed rule [84 FR 57240] that would establish risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities. The Board is proposing a risk-based capital framework, termed the Building Block Approach, that adjusts and aggregates existing legal entity capital requirements to determine an enterprise-wide capital requirement, together with a risk-based capital requirement excluding insurance activities, in compliance with section 171 of the Dodd-Frank Act.

The Board is additionally proposing to apply a buffer to limit an insurance depository institution holding company's capital distributions and discretionary bonus payments if it does not hold sufficient capital relative to enterprise-wide risk, including risk from insurance activities. The proposal would also revise reporting requirements for depository institution holding companies significantly engaged in insurance activities.

Comments must be received by December 23, 2019.

Update: In a Federal Register notice [84 FR 67381] published 12/10/2019, the Board extended the comment period through 1/22/2020.