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Financial Stability Board leaves systemically important insurer list unchanged


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Financial Stability Board leaves systemically important insurer list unchanged

The Financial Stability Board decided not to publish a new list of global systemically important insurers for 2017, saying it could reconsider how it assesses systemic risk in the insurance sector and how the insurers, as well as policy measures applied to them, are identified.

The regulator said an "activities-based approach" to systemic risk being developed by the International Association of Insurance Supervisors, or IAIS, may have a significant effect on its assessment methods, adding that it will review progress on the approach in November 2018.

Policy measures set out in the FSB's 2016 list, however, will continue to apply to the firms designated as systemically important a year ago. These include a requirement to build an additional capital buffer known as the higher loss-absorbency standard.

The FSB's list in 2016 comprised AEGON NV, Allianz Group, American International Group Inc., Aviva Plc, Axa, MetLife Inc., Ping An Insurance (Group) Co. of China Ltd., Prudential Financial Inc. and Prudential Plc. AIG was de-designated as a U.S. systemically important financial institution in late September. MetLife successfully sued to have its designation removed, though a pending appeals court decision could override its victory in the lower court, and Prudential Financial has also suggested it could sue the U.S. to remove its designation.

The FSB first created its list of global systemically important insurers in 2013, using assessment methods also developed by the IAIS, and has updated it every November.

"The current list approach, with automatic capital increases for those included, and largely driven by the size, is flawed," Reuters quoted Nicolas Jeanmart, head of personal and general insurance at industry lobby group Insurance Europe, as saying.

Association of British Insurers policy adviser Annalise Vucetich, meanwhile, said the reason the FSB opted not to update the list was unclear as the IAIS has barely made progress on the new activities-based approach.