(a) Purpose. This subpart establishes a framework for assessing
overall risk-based capital for Board-regulated institutions that are
significantly engaged in insurance activities. The framework in this
subpart is used to measure available capital resources and capital
requirements across a Board-regulated institution and its subsidiaries
that are subject to diverse capital frameworks, aggregate available
capital resources and capital requirements and calculate a ratio that
reflects the overall capital adequacy of the Board-regulated institution.
(b) Applicability. This subpart applies to every Board-regulated institution that is:
(1) A top-tier
depository institution holding company that is an insurance underwriting
company; or
(2) A top-tier
depository institution holding company, that, as of June 30 of the
previous calendar year, held 25 percent or more of its total consolidated
assets in insurance underwriting companies (other than assets associated
with insurance underwriting for credit risk). For purposes of this
paragraph (b)(2), the Board-regulated institution must calculate its
total consolidated assets in accordance with GAAP, or if the Board-regulated
institution does not calculate its total consolidated assets under
GAAP for any regulatory purpose (including compliance with applicable
securities laws), the company may estimate its total consolidated
assets, subject to review and adjustment by the Board; or
(3) Depository institution
holding company in a supervised insurance organization; or
(4) An institution that is
otherwise made subject to this subpart by the Board.
(c) Exclusion of certain
depository institution holding companies. Notwithstanding paragraph
(b) of this section, this subpart does not apply to a top-tier depository
institution holding company that—
(1) Exclusively files financial statements
in accordance with Statutory Accounting Principles (SAP);
(2) Is not subject to a state
insurance capital requirement; and
(3) Has no subsidiary depository institution
holding company that—
(i) Is subject to a capital requirement;
or
(ii) Does not
exclusively file financial statements in accordance with SAP.
(d) Reservation
of authority.
(1) Regulatory
capital resources.
(i) If the Board determines that a particular
company capital element has characteristics or terms that diminish
its ability to absorb losses, or otherwise present safety and soundness
concerns, the Board may require the supervised insurance organization
to exclude all or a portion of such element from building block available
capital for a depository institution holding company in the supervised
insurance organization.
(ii) Notwithstanding any provision of
section 217.608, the Board may find that a capital resource may be
included in the building block available capital of a depository institution
holding company on a permanent or temporary basis consistent with
the loss absorption capacity of the capital resource and in accordance
with section 217.608(g).
(2) Required
capital amounts. If the Board determines that the building block
capital requirement for any depository institution holding company
is not commensurate with the risks of the depository institution holding
company, the Board may adjust the building block capital requirement
and building block available capital for the supervised insurance
organization.
(3) Structural requirements. In order to achieve
the appropriate application of this subpart, the Board may require
a supervised insurance organization to take any of the following actions
with respect to the application of this subpart, if the Board determines
that such action would better reflect the risk profile of an inventory
company or the supervised insurance organization:
(i) Identify
components under this subpart differently than as done by the supervised
insurance organization. This could include a different identification
of a top-tier depository institution holding company, an inventory
company, a material financial entity, or a building block parent,
then that made by the supervised insurance organization; or
(ii) Set a building block
parent’s allocation share of a downstream building block parent equal
to 100 percent.
(4) Other reservation
of authority. With respect to any treatment required under this
subpart, the Board may require a different treatment, provided that
such alternative treatment is commensurate with the supervised insurance
organization’s risk and consistent with safety and soundness.
(e) Notice and response
procedures. In making any determinations under paragraph (d)
of this section, the Board will apply notice and response procedures
in the same manner as the notice and response procedures in section
263.202 of this chapter.
