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H.R. 5059: State Insurance Regulation Preservation Act

The text of the bill below is as of Feb 15, 2018 (Introduced).


I

115th CONGRESS

2d Session

H. R. 5059

IN THE HOUSE OF REPRESENTATIVES

February 15, 2018

(for himself and Mrs. Beatty) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Home Owners’ Loan Act with respect to the registration and supervision of insurance savings and loan holding companies, and for other purposes.

1.

Short title

This Act may be cited as the State Insurance Regulation Preservation Act.

2.

Supervision of insurance savings and loan holding companies

(a)

Definitions

Section 10(a)(1) of the Home Owners’ Loan Act (12 U.S.C. 1467a(a)(1)) is amended by adding at the end the following:

(K)

Insurance savings and loan holding company

The term insurance savings and loan holding company means—

(i)

a top-tier savings and loan holding company that is an insurance underwriting company;

(ii)

a savings and loan holding company that held 75 percent or more of its total consolidated assets in an insurance underwriting company or insurance underwriting companies, other than assets associated with insurance for credit risk, during the 4 most recent consecutive quarters, as calculated in accordance with generally accepted accounting principles or the Statutory Accounting Principles of the National Association of Insurance Commissioners, as applicable; or

(iii)

a top-tier savings and loan holding company that—

(I)

was registered as a savings and loan holding company before July 21, 2010; and

(II)

is a New York not-for-profit corporation formed for the purpose of holding the stock of a New York insurance company.

(L)

Insurance underwriting company

The term insurance underwriting company means an entity that is—

(i)

engaged in the business of insurance;

(ii)

subject to regulation by a State insurance regulator; and

(iii)

covered by a State law that is designed to specifically deal with the rehabilitation, liquidation, or insolvency of an insurance company.

(M)

Material subsidiary

The term material subsidiary

(i)

means a subsidiary that has—

(I)

off-balance sheet activities not less than $5,000,000,000;

(II)

equity capital not less than 5 percent of the consolidated equity capital of the top-tier holding company; or

(III)

consolidated operating revenue not less than 5 percent of the consolidated operating revenue of the top-tier holding company; and

(ii)

does not include a subsidiary that is—

(I)

a functionally regulated subsidiary;

(II)

a nonoperating shell holding company; or

(III)

primarily engaged in—

(aa)

servicing activities for the holding company or its affiliates, including the activities described in section 225.22(b)(2) of title 12, Code of Federal Regulations; or

(bb)

internal financial activities, as that term is defined in section 10A(a).

.

(b)

Registration and examination

Section 10(b) of the Home Owners’ Loan Act (12 U.S.C. 1467a(b)) is amended—

(1)

in paragraph (1), by inserting , and which shall, if applicable, provide for a savings and loan holding company to register as an insurance savings and loan holding company before the period at the end of the first sentence;

(2)

in paragraph (2)—

(A)

in subparagraph (A), by striking Each savings and loan holding company and inserting Subject to subparagraph (D), each savings and loan holding company;

(B)

in subparagraph (C)—

(i)

by striking Upon and inserting the following:

(i)

In general

Upon

; and

(ii)

by adding at the end the following:

(ii)

Insurance savings and loan companies

In the case of an insurance savings and loan holding company—

(I)

clause (i) shall not apply; and

(II)

the Board shall submit a request for any information described in clauses (i) through (iii) of subparagraph (B) to the appropriate Federal or State regulatory agencies.

; and

(C)

by adding at the end the following:

(D)

Insurance savings and loan holding companies

An insurance savings and loan holding company may be required only to file reports related to—

(i)

the organizational structure of the company and any changes in that structure;

(ii)

transactions between the company and its affiliates;

(iii)

balance sheet and income statements of a material subsidiary of the company; and

(iv)

the capital holdings of the company in relation to applicable minimum capital standards.

;

(3)

in paragraph (3), by inserting , other than an insurance savings and loan holding company, after company; and

(4)

in paragraph (4)—

(A)

in subparagraph (A), by inserting and subparagraph (D) after 2010; and

(B)

by adding at the end the following:

(D)

Insurance savings and loan holding companies

(i)

Tailored examinations and supervision

Board examinations of, and supervisory guidance applicable to, an insurance savings and loan holding company shall be based upon a supervisory framework that is—

(I)

tailored to the risks and activities of the business of insurance; and

(II)

developed in consultation with State insurance authorities to ensure that such framework does not duplicate or conflict with State insurance requirements.

(ii)

Exemption for companies that meet applicable capital standards

Subject to clause (iii), the Board shall neither examine nor apply supervisory guidance to an insurance savings and loan holding company, or any subsidiary of an insurance savings and loan holding company (other than a material subsidiary), if such company—

(I)

meets or exceeds applicable State insurance capital standards; and

(II)

meets or exceeds any minimum capital standards for an insurance savings and loan holding company promulgated by the Board under section 171 of the Financial Stability Act of 2010 (12 U.S.C. 5371).

(iii)

Corrective action plan

(I)

In general

If, based upon a capital report submitted pursuant to paragraph (2)(D)(iv), an insurance savings and loan holding company is not in compliance with any applicable minimum capital standards, the Board shall provide a notice of noncompliance to the company and require the company to submit, within 45 days of the receipt of such notice, a plan to restore the capital of the company to a level that meets the applicable minimum standards not later than the later of—

(aa)

1 year after the date on which the plan is submitted; or

(bb)

a date determined by the Board.

(II)

Failure to submit plan

If a company fails to submit a required capital restoration plan, or fails to restore capital to applicable minimum standards within the time period specified in the plan, the Board, following notice and an opportunity for a hearing, may prohibit the application of clause (ii) to the company until the later of—

(aa)

the date on which the company has met applicable minimum capital standards for 2 calendar years; or

(bb)

a date determined by the Board.

.

(c)

Administration and enforcement

Section 10(g) of the Home Owners’ Loan Act (12 U.S.C. 1467a(g)) is amended—

(1)

in paragraph (1), by inserting In issuing any regulation, order, or supervisory guidance applicable to an insurance savings and loan holding company, including a regulation, order, or guidance related to capital, stress testing, and cybersecurity, the Board shall tailor such regulation, order, or guidance to the risks and activities of the business of insurance and shall consult with State insurance authorities to ensure that the regulation, order, or guidance does not duplicate or conflict with State insurance requirements. after the period at the end; and

(2)

in paragraph (2), by inserting In the case of an insurance savings and loan holding company, the authority of the Board to conduct investigations shall be limited to the material subsidiaries of the insurance savings and loan holding company. after the period at the end.

(d)

Intermediate holding companies

Section 10A(d) of the Home Owners’ Loan Act (12 U.S.C. 1467b(d)) is amended by adding at the end the following:

(3)

Insurance savings and loan holding companies

If the Board requires a grandfathered unitary savings and loan holding company that is an insurance savings and loan holding company to establish an intermediary holding company to engage in financial activities, the intermediary holding company shall be treated as an insurance savings and loan holding company for purposes of supervision and regulation by the Board.

.

(e)

Emergency supervisory authority

Section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a) is amended by adding the following new subsection at the end thereof:

(u)

Emergency supervisory authority

The Board, by order, may suspend the application of paragraphs (2)(C)(ii), (2)(D), and (4)(D) of subsection (c) and the final sentences of paragraphs (1) and (2) of subsection (g) to an insurance savings and loan holding company and apply subsection (b)(3) to an insurance savings and loan holding company if the Board, after consultation with the State insurance authority for the insurance savings and loan holding company, reasonably determines that the operations and activities of the insurance savings and loan holding company pose a serious and imminent risk to the financial safety and soundness or stability of the insurance savings and loan holding company’s subsidiary saving association.

.

3.

Assessments and fees for insurance savings and loan holding companies

Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended, in the second subsection (s) (relating to assessments), by adding at the end the following:

(3)

Excluded assets

With respect to an insurance savings and loan holding company, as defined in section 10 of the Home Owners’ Loan Act (12 U.S.C. 1467a), the total consolidated assets described in paragraph (2)(B) shall not include any asset of an insurance company.

.