Boston, MA 06/06/2014 (wallstreetpr) – Senate has eased the Dodd-Frank law which imposed capital standards on insurers coming under the category of systemically important. It came as a good news for MetLife Inc (NYSE:MET) and its peer Prudential Financial Inc (NYSE:PRU). Both the companies’ stocks rallied after the news. The Senate has approved the bill as per which Federal Reserve Regulators will be more flexible in allying the capital rules to the US life insurers. It, in fact, is the easing of the Dodd-Frank Act provision. The provision was applicable on insurers that are deemed systemically important. Prudential was already in the list and Metlife will soon be given the same designation,
The flexibility to the insurers
Federal Reserve regulators are more inclined towards providing the flexibility to the insurers. It is good news for the insurance firms termed as systemically important. The insurers like Metlife Inc (NYSE:MET) seek more certainty in the regulatory framework. The uncertainties lead to an adverse impact on the profits. The flexibility provided will help the insurance companies to meet the reasonable capital standards. Metlife and other insurers are encouraged by the recent changes.
Susan Collins wrote the dodd-frank law. She stated that the law was not written to make insurance companies suffer from the harsh laws. The new Fed action has set the minimum capital and leverage standards for the insurers and the non-bank firms. Initially
The darker side
The easing of Dodd-Frank law encouraged Metlife Inc (NYSE:MET). However, at the other end it is still fighting to dodge the central bank’s reach. Despite closing of the banking operations far behind, the insurer cannot escape the Fed’s oversight. The insurer said that it is essential to take care of the regulatory uncertainties as it adversely affects the profit targets. The company will soon be deemed as systemically important and will be subjected to stricter Fed supervision.
