AIG sees uncertainty in ‘too-big-to-fail’ label for insurers-filing

By Suzanne Barlyn

Insurance giant American International Group sees “considerable uncertainty” about U.S. regulations that deem non-bank financial institutions as being too big to fail, given the recent change in White House administrations, according to a filing.

The “appropriateness and federal regulation” of non-bank too-big-to-fail institutions may also be questioned, AIG wrote in its 2016 annual filing.

AIG is among a small number of insurers deemed by the U.S. government as being systemically important to the economy. The label, which comes from the 2010 Dodd-Frank financial reform law, subjects certain insurers and banks to tougher supervision and capital requirements.

AIG’s near-collapse in 2008 and its $182 billion bailout by the U.S. government led to its inclusion in the Federal Reserve’s list of “systemically important financial institutions,” known as SIFIs.

The election of President Donald Trump has led to speculation in the financial services industry and on Wall Street that the label and the requirements it imposes could be abolished. Trump’s campaign promises included dismantling the Dodd-Frank law, which was passed in the wake of the 2007-09 financial crisis.

On Feb. 3, Trump ordered a review of Dodd-Frank reforms. Trump has said his administration expects “to be cutting a lot out of Dodd-Frank,” although the scope of Trump’s plans is unclear.
Tax reform, which Trump has also discussed, could affect AIG as well, the insurer said in its filing.

A change in the U.S. corporate tax rate could reduce the values of its deferred tax assets and investments in tax-exempt securities, AIG said.

Other changes, such as the way foreign taxes can be credited against U.S. taxes, and how insurance companies calculate and deduct reserves for tax purposes, could increase AIG’s tax expense and reduce earnings, the insurer said.

(Reporting by Suzanne Barlyn; Editing by David Gregorio and Jonathan Oatis)


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