Nine large global insurers are learning to operate as global systemically important insurers(G-SIIs) after the Financial Stability Board(FSB) assigned them this designation last July, and Standard & Poor's says we should hear in November whether the FSB will add any reinsurers to the list. While being a G-SII comes with additional oversight and potentially higher capital requirements, no rating actions(in either direction) have resulted from the designation thus far. But as S & P explains in "Insurers May Not Pose A Systemic Risk, So Do The G-SII Designation's Costs Outweigh Its Benefits?," published this week, it believes that classification as a G-SII may have longer-term credit consequences for these insurers, both positive and negative.
The rating agency adds "We recognize that large insurers are systemically important because of the role they play in the financial system. However, we question whether their potential failure poses a systemic risk in the same way that most large banks' would. As such, the question becomes whether naming certain insurers as G-SIIs enhances financial stability and warrants the resulting costs to insurers and their regulators."
Under Standard & Poor's policies, only a Rating Committee can determine a Credit Rating Action(including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.
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