Words

Market Moving Information

• Change no Damage??

•  I have heard that the designation process is not transparent, and I am all for increased transparency, but I assume the Council must balance transparency against disclosing confidential or potentially market-moving information. (p37/2:08)

—  Senator Elizabeth Warren (D-MA)

2015 0325 – GOV (Senate-Banking) – FSOC Accountability: Nonbank Designations – [PDF-165p,  VIDEO-CSPAN]

• 1991 0522 – GOV – Executive Life Insurance Failure
  • 51:00- 52:50 – Garamendi – Tennesee Sundquist – Shouldn’t Say, Have to Say /  Can’t Say. Bonds Prices. 

• 1989 0501- CSPAN – Where Was the Press During the S&L Crisis? – c-span.org/video/?7307-1/press-sl-crisis
  • This program is part of a series of three panel discussions entitled “Where Were the Watchdogs When the Savings & Loans Were Robbed?”

• He (ACLI – John Bruins) said the ACLI is concerned about the reaction that may be received from consumers when their policy illustration changes, even though no changes have been made to the product being illustrated.
  • He noted that several companies have indicated receiving negative reactions from policyowners when their policy illustration changed.

2016 04 – LATF, NAIC Conference Call

• 2017 0328 – GOV – THE ARBITRARY AND INCONSISTENT NON-BANK SIFI DESIGNATION PROCESS
  • [PDF-83p, VIDEO-youtube]
  • Anne Wagner (MO)
  • Holtz-Eakin, Douglas, President, American Action Forum
  • Kupiec, Paul H., Resident Scholar, American Enterprise Institute
  • Pollock, Alex J., Distinguished Senior Fellow, R Street Institute 
    Zaring, David, Associate Professor, Legal Studies and Business Ethics, The Wharton School, University of Pennsylvania
  • House – COMMITTEE ON FINANCIAL SERVICES – SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

• Second, notwithstanding our disagreement with FSOC’s decision to designate Prudential and MetLife, we are even more troubled by the lack of clarity provided to regulators or even the companies themselves on the specific issues of concern that led to these companies’ designation.
• This approach ultimately fails to make the financial system safer from the risks the company poses because regulators and the company have little information on how to address the company’s risk to the system.

–NAIC Letter to GOV

2015 0325 – GOV – FSOC Accountability Nonbank Designations –  3p

• (p45) – Q15 – Is the list of products and activities set out in Annex 1 representative of the insurance activities and products that are conducted in the listed jurisdictions? Are there other products and activities that should be added to the list, for example because they have similar features as those in Annex 1? To what extent, if any, will the analysis of the products and activities in Annex 1 allow for the consistent application of the NTNI concept across jurisdictions? Also, are there additional or alternative terms for the listed products and activities that should be added to improve the completeness and clarity of the list?
• (p47) – Q15 Stakeholders comments
  • Universal life is missing from the list…
    • on behalf of the European GSIIs, Aegon, Allianz, Aviva, Axa and Prudential
    • Association of British Insurers
• (p48) – Q15 IAIS response

  • (ii) the IAIS decided to discontinue the NTNI product label and to focus on substantial liquidity risk and macroeconomic exposure and their related systemic risk transmission channels, the IAIS believes that it is no longer necessary to proceed with the publication of a list of products as proposed in the CD.

  • It is worth noting that the list of product features, and by extension products considered for the purposes of Phase Il Minimum Guarantees on Variable Product indicator calculation, remains unchanged from the 2013 methodology.

2016 0720 – IAIS – NTNI Consultation Document IAIS Responses to Comments – 51p

• The IAIS received 56 submissions in response to the 2018 ICS Consultation Document of which 18 were requested by the respondents to be kept confidential.
• Therefore, the comments that are posted here publicly are a subset of those that the IAIS will be taking into account as it moves forward with the ICS.
• We thank all stakeholders and members who took the time to provide the many thoughtful comments on all aspects of the ICS.

iaisweb.org/page/supervisory-material/insurance-capital-standard//file/82711/public-2019-iais-field-testing-technical-specifications

• Mr. Brown, CLU, presented his statement on behalf of the National Association of Life Underwriters.
  • Mr. Brown’s testimony emphasized the market confusion engendered by the FTC’s release of the 1.3% rate of return. He provided numerous examples of misleading and deceptive advertisements based on the FTC press release.
  • He also gave examples of cancellations and replacements of whole life policies caused by the FTC’s misleading release.
  • His point was the grave injury which the FTC’s irresponsible actions have caused average life insurance consumers.

1980-1, NAIC Proceedings

• (p2) – Q1 – 1 – Based on the above characterisation of NTNI, is the terminology “non-traditional” confusing? If so, what might be a better term than NTNI? Additionally, what might be a better term than “traditional” for products and activities that are not NTNI?
  • The division into “traditional” and “non-traditional” products and activities is not properly fitting, considering that some products classified as systemically risky might be part of an insurer’s traditional business. Thus, terms like “insurance-driven” and “market-driven” would be more appropriate for clarifying the intention behind the distinction of the two. A clearer and also simpler way would be the separation between “potentially systemically risky” and “not systemically.
    • GDV – German Insurance Association
  • Yes, the term “non-traditional” could create confusion. The introduction to the Consultation explains that one main objective is to “provide further clarification on the concepts of NT and explain how their characteristics drive their systemic relevance.” (emphasis added) As this statement suggests, the concept of “non-traditional” is focused on identifying potential sources of systemic significance or risk, and is not intended to define whether an activity is one that insurers have “traditionally” pursued according to the ordinary meaning of that term. As the Consultation notes, an activity might generate systemic risk, even though it is one that has a long-established history, and is therefore one that is “traditionally” offered by insurers in a particular marketplace. Similarly, new products or practices may not be systemically risky, or might reduce overall systemic risk, despite being new or innovative.
    • American Academy of Actuaries
• (p94) – Q2 – 2 – Are there any other benefit or liquidity features that should be taken into account in identifying NTNI products and activities?
  • It would appear that products where benefits are variable at the discretion of the insurer but where the insurer has no obligation to share profit, such as universal life and certain kinds of deferred annuities sold in the US are not covered in the table.
    • AIA Group – Hong Kong
• (p94) – Q15 – Is the list of products and activities set out in Annex 1 representative of the insurance activities and products that are conducted in the listed jurisdictions? Are there other products and activities that should be added to the list, for example because they have similar features as those in Annex 1? To what extent, if any, will the analysis of the products and activities in Annex 1 allow for the consistent application of the NTNI concept across jurisdictions? Also, are there additional or alternative terms for the listed products and activities that should be added to improve the completeness and clarity of the list?
  • Universal life is missing from the list, and perhaps some consideration should be given to product packaging, secondary benefits and riders.

—  on behalf of the European GSIIs, Aegon, Allianz, Aviva, Axa and Prudential, Association of British Insurers

IAIS – Compiled Comments on Non-traditional Non-insurance Activities and Products – 153p

A: She <Sheila Bair> was saying that a couple of hundred banks would fail. I thought that was totally imprudent, totally incorrect, and should not have been said.
Q. Why was that imprudent and should not have been said?
A. Because these are people that are supposed to make sure that banks don’t fail.
Q. Why is it that publicly saying that all of these banks are likely to fail, why would you consider that to be imprudent?
A. Because it creates fear.
Q. And what is the problem of creating fear?
A. That it causes the banking system to freeze up. It causes it causes a hording of cash, both within the financial system and outside of the financial system, and that hording of cash results in a negative impact on the economy.
Q. All right. Then you go on to say: are no benefits by having prominent officials claiming that large financial institutions are
“There failing, are insolvent, are incapable of raising funds, or that they should be allowed to fail.”

Bank Atlantic vs. Richard X. Bove and Landenburg

• int.nyt.com/data/int-shared/nytdocs/docs/476/476.pdf
• • (p199) – Deposition of Richard X. Bove

• Because of the concerns expressed by several states over the potential impact of the survey and at the suggestion of NAIC staff, a draft of the survey was forwarded to the Special (EX) Committee on the McCarran-Ferguson Act.
• The Executive Committee designated Commissioner Earl Pomeroy, as chair of that committee and as the President of NAIC, to provide further input and direction.
• Accordingly, on Sept. 10, I met with Commissioner Pomeroy, along with Mike Hessler (Ill.), Tom Reents (Neb.) and Art Chartrand (NAIC) to review these issues.
• First, I wish to greatly express my appreciation to Commissioner Pomeroy for articulating his concerns and providing a productive framework for this subgroup to continue to carryout its charge.
• As a result of that meeting, it was mutually agreed to suspend the activity on the current survey and to proceed as follows:
  • 2. Commissioner Pomeroy was very supportive of the subgroup recommending to EX3 Subcommittee that it pursue its investigation and make any appropriate recommendations in regard to the use of purported “consumer” groups fronting as leads or advertising agencies for insurance companies.

1991-1A, NAIC Proceedings

TO: Members of the Market Conduct & Consumer Affairs (EX3) Subcommittee
FROM: Brad Connor (Mo.), Chair of EX3 Subgroup on Unfair Trade Practices
DATE: October 11, 1990 .
RE: Meeting with NAIC Leadership on Subgroup’s Projects