President Obama has signed into law The Insurance Capital Standards Clarification Act, S. 2270, which loosens the Dodd-Frank capital restrictions on insurers. The legislation makes changes to Section 171 of the Dodd-Frank Act, known as the Collins Amendment, by adding language clarifying that the Federal Reserve is not required to include entities engaged in insurance activities regulated at the state level when establishing minimum capital requirements for holding companies on a consolidated basis. The legislation also creates a mechanism for the Federal Reserve, working together with state insurance regulators, to provide similar treatment with regard to foreign insurance entities within a U.S. holding company. Further, the legislation directs that entities supervised by the Federal Reserve that are engaged in the business of insurance and file financial statements with state insurance regulators using only Statutory Accounting Principles will not be required to prepare their financial statements using Generally Accepted Accounting Principles.
This newly enacted legislation will allow the Federal Reserve to take into consideration the significant distinctions between insurance and banking and the implications of these differences for determining capital adequacy. The text of the legislation can be found here