The FDIC issued a proposed rule (the “Proposed Rule”) that would treat mutual insurance companies as “insurance companies” for purposes of liquidation and rehabilitation. Section 203(e) of the Dodd-Frank Act required that the treatment of mutual insurance companies be harmonized with the treatment of stock insurance companies under state insolvency laws. Accordingly, the Proposed Rule would treat mutual insurance companies as “insurance companies,” subject to certain requirements. In general, a mutual insurance company, to be deemed an “insurance company” under the Proposed Rule, would have to be subject to the insurance law of the state of its domicile for, among other things, liquidation and rehabilitation purposes, and the insurance company’s largest U.S. subsidiary would have to be an insurance company or an intermediate insurance stock holding company and it would need to meet certain investment tests. Comments on the Proposed Rule are due by February 13, 2012.
Alert December 20, 2011