FSB Examines ‘Too Big to Fail’ Insurers; CIRC Expands Insurers’ Investments

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The Financial Stability Board said an extended version of its guidance on the resolution of systemically important banks will apply to non-bank financial institutions, such as Allianz SE and other large insurers.

The Basel, Switzerland-based body set up by the Group of 20 nations has developed “annexes” to its advice for local regulators of financial institutions that aren’t lenders, according to an e-mailed statement yesterday. The FSB asked for responses from market participants by Oct. 15.

The FSB, led by Bank of England Governor Mark Carney, is coordinating the global regulatory response to the worst financial crisis since the Great Depression to prevent a repeat of the turmoil that followed the collapse of Lehman Brothers Holdings Inc. and bailout of American International Group Inc.

Last month, the FSB published a list of nine too-big-to- fail insurers, including Allianz, American International Group Inc., MetLife Inc., Prudential Financial Inc. and AXA SA.

The FSB “set out the core elements considered necessary to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to losses,” it said yesterday.

CIRC Head to Expand Scope of Insurers’ Investments, Caixin Says
The China Insurance Regulatory Commission will expand the industries in which insurers may invest as debt holders, Caixin’s New Century magazine reported, citing an interview with Xiang Junbo, head of the commission.

CIRC is studying how to set up a fund for insurers to invest in small companies, Xiang said, according to the Caixin report. Investments by insurers in local government financing vehicles are currently less than 200b yuan, Xiang said in the magazine interview.

The commission is also studying new rules to govern Internet insurance operations, Xiang said, according the magazine.

–With assistance from Karin Matussek in Berlin, Ben Moshinsky in Brussels, Zeke Faux and Saijel Kishan in New York, Carolyn Bandel in Zurich and Regina Tan in Beijing. Editor: Glenn Holdcraft