The introduction of added regulatory requirements on global systemically important insurers (GSIIs) will enhance risk management and stability, according to a new report from New York-based Moody’s Investors Service Inc.
The requirements that will apply to the nine GSIIs, as designated by the Financial Stability Board (FSB), is credit positive because “the additional regulatory oversight and capital requirements on a group-wide basis will result in improvements in risk management and the development of contingency plans to restore or protect capitalization in stress scenarios,” the report says.
The report says analysts at Moody’s don’t expect any major changes to the business models of the insurers themselves in response to the regulations. Furthermore, it notes that insurers are already following some of the non-quantitative requirements of the new regulations on a voluntary basis.
“Overall, we consider the GSII regulation to be positive for policyholders and, to a lesser extent, bondholders,” says Benjamin Serra, vice president and senior credit officer at Moody’s, in a statement.