[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                  U.S. INSURANCE SECTOR: INTERNATIONAL
                        COMPETITIVENESS AND JOBS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         INSURANCE, HOUSING AND
                         COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 17, 2012

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 112-129












                  U.S. GOVERNMENT PRINTING OFFICE

75-735 PDF                WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001
















                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                   SPENCER BACHUS, Alabama, Chairman

JEB HENSARLING, Texas, Vice          BARNEY FRANK, Massachusetts, 
    Chairman                             Ranking Member
PETER T. KING, New York              MAXINE WATERS, California
EDWARD R. ROYCE, California          CAROLYN B. MALONEY, New York
FRANK D. LUCAS, Oklahoma             LUIS V. GUTIERREZ, Illinois
RON PAUL, Texas                      NYDIA M. VELAZQUEZ, New York
DONALD A. MANZULLO, Illinois         MELVIN L. WATT, North Carolina
WALTER B. JONES, North Carolina      GARY L. ACKERMAN, New York
JUDY BIGGERT, Illinois               BRAD SHERMAN, California
GARY G. MILLER, California           GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            JOE BACA, California
MICHELE BACHMANN, Minnesota          STEPHEN F. LYNCH, Massachusetts
THADDEUS G. McCOTTER, Michigan       BRAD MILLER, North Carolina
KEVIN McCARTHY, California           DAVID SCOTT, Georgia
STEVAN PEARCE, New Mexico            AL GREEN, Texas
BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri
MICHAEL G. FITZPATRICK,              GWEN MOORE, Wisconsin
    Pennsylvania                     KEITH ELLISON, Minnesota
LYNN A. WESTMORELAND, Georgia        ED PERLMUTTER, Colorado
BLAINE LUETKEMEYER, Missouri         JOE DONNELLY, Indiana
BILL HUIZENGA, Michigan              ANDRE CARSON, Indiana
SEAN P. DUFFY, Wisconsin             JAMES A. HIMES, Connecticut
NAN A. S. HAYWORTH, New York         GARY C. PETERS, Michigan
JAMES B. RENACCI, Ohio               JOHN C. CARNEY, Jr., Delaware
ROBERT HURT, Virginia
ROBERT J. DOLD, Illinois
DAVID SCHWEIKERT, Arizona
MICHAEL G. GRIMM, New York
FRANCISCO ``QUICO'' CANSECO, Texas
STEVE STIVERS, Ohio
STEPHEN LEE FINCHER, Tennessee

           James H. Clinger, Staff Director and Chief Counsel
      Subcommittee on Insurance, Housing and Community Opportunity

                    JUDY BIGGERT, Illinois, Chairman

ROBERT HURT, Virginia, Vice          LUIS V. GUTIERREZ, Illinois, 
    Chairman                             Ranking Member
GARY G. MILLER, California           MAXINE WATERS, California
SHELLEY MOORE CAPITO, West Virginia  NYDIA M. VELAZQUEZ, New York
SCOTT GARRETT, New Jersey            EMANUEL CLEAVER, Missouri
PATRICK T. McHENRY, North Carolina   WM. LACY CLAY, Missouri
LYNN A. WESTMORELAND, Georgia        MELVIN L. WATT, North Carolina
SEAN P. DUFFY, Wisconsin             BRAD SHERMAN, California
ROBERT J. DOLD, Illinois             MICHAEL E. CAPUANO, Massachusetts
STEVE STIVERS, Ohio















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 17, 2012.................................................     1
Appendix:
    May 17, 2012.................................................    29

                               WITNESSES
                         Thursday, May 17, 2012

Bartlett, Hon. Steve, President and Chief Executive Officer, The 
  Financial Services Roundtable..................................     8
Kochenburger, Peter, Executive Director, Insurance Law Center, 
  and Associate Clinical Professor of Law, the University of 
  Connecticut School of Law......................................    10
McCarty, Hon. Kevin M., Commissioner, Florida Office of Insurance 
  Regulation, on behalf of the National Association of Insurance 
  Commissioners (NAIC)...........................................     6
McRaith, Hon. Michael T., Director, Federal Insurance Office, 
  U.S. Department of the Treasury................................     5
O'Bryant, Allan E., Executive Vice President, and Head of 
  International Markets and Operations, Reinsurance Group of 
  America, Inc. (RGA), on behalf of the Reinsurance Association 
  of America (RAA)...............................................    12
Sapnar, Michael C., President and Chief Executive Officer, 
  Transatlantic Reinsurance Company, on behalf of the Reinsurance 
  Association of America (RAA)...................................    14
Toppeta, William J., Vice Chairman, MetLife, Inc.................    15
Vastine, J. Robert, President, Coalition of Service Industries 
  (CSI)..........................................................    17

                                APPENDIX

Prepared statements:
    Dold, Hon. Robert............................................    30
    Bartlett, Hon. Steve.........................................    32
    Kochenburger, Peter..........................................    38
    McCarty, Hon. Kevin M........................................    46
    McRaith, Hon. Michael T......................................    57
    O'Bryant, Allan E............................................    64
    Sapnar, Michael C............................................    76
    Toppeta, William J...........................................    93
    Vastine, J. Robert...........................................   104

              Additional Material Submitted for the Record

Gutierrez, Hon. Luis:
    Letter to Treasury Secretary Timothy F. Geithner from the 
      Financial Services Roundtable..............................   112
Hurt, Hon. Robert:
    Written statement of the American Insurance Association......   115
    Written statement of The Council of Insurance Agents and 
      Brokers....................................................   121
    March 2009 report of the United States International Trade 
      Commission entitled, ``Property and Casualty Insurance 
      Services: Competitive Conditions in Foreign Markets''......   125
    Written statement of the National Association of Mutual 
      Insurance Companies (NAMIC)................................   233
    Written statement of the Property Casualty Insurers 
      Association of America (PCI)...............................   237

 
                  U.S. INSURANCE SECTOR: INTERNATIONAL
                        COMPETITIVENESS AND JOBS

                              ----------                              


                         Thursday, May 17, 2012

             U.S. House of Representatives,
                 Subcommittee on Insurance, Housing
                         and Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2128, Rayburn House Office Building, Hon. Judy Biggert 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Biggert, Hurt, Capito, 
Dold; Gutierrez, Cleaver, Clay, Watt, and Sherman.
    Chairwoman Biggert. This hearing of the Subcommittee on 
Insurance, Housing and Community Opportunity will come to 
order.
    We will get through our opening statements and then hear 
from all the witnesses, and we thank you.
    And thank you, Director McRaith, for agreeing to have the 
two panels together. I think that this will work out well. So, 
thank you very much.
    And good afternoon. I would like to welcome our 
distinguished panel of witnesses to today's hearing.
    As our subcommittee and others hold hearings, particularly 
on Dodd-Frank, one distinction has become increasingly clear: 
Insurance is not banking. We all saw how well the U.S. 
insurance sector, in contrast to the banking sector, weathered 
the financial crisis. That point was highlighted in the first 
annual report issued by the U.S. Financial Stability Oversight 
Council (FSOC).
    Nonetheless, domestic regulators continue to press for a 
bank-centric model of regulation for insurance providers. And 
today, we are expanding our oversight beyond our borders to 
international issues that have created uncertainty for U.S. 
insurance and reinsurance companies. Are we doing everything 
that we can to help our American businesses compete, export 
services, and create jobs here in the United States? I think we 
can do more.
    According to the Bureau of Economic Analysis, in 2011 the 
United States imported more insurance services than it 
exported, with U.S. exports totaling $15.4 billion and U.S. 
imports totaling $57.6 billion. Contrast that with the fact 
that other noninsurance financial services exports totaled $73 
billion and imports totaled $15.1 billion.
    For our insurers and the domestic jobs they create, we must 
do better. Don't get me wrong, the creation of the Federal 
Insurance Office, or FIO, which I supported, will help our U.S. 
insurers compete abroad. And other organizations are working 
toward the same goal, including the National Association of 
Insurance Commissioners, or NAIC; State regulators; the U.S. 
Trade Representative; the Treasury and State Departments; and 
other insurance trade associations, including the American 
Council for Life Insurers, the American Insurance Association, 
the Reinsurance Association of America, and many others.
    But we can do more to help our insurers remain competitive 
and gain access to new markets abroad. According to a 2009 
report issued by the U.S. International Trade Commission, 
liberalization of property-casualty foreign insurance markets 
would result in greater access for U.S. insurers, billions of 
dollars in increased sales, and increased employment at U.S.-
based companies, among other economic benefits.
    That is why during today's hearing, we will examine the 
international competitiveness of U.S.-domiciled insurance and 
reinsurance companies. We will hear from witnesses about the 
opportunities and challenges that regulatory changes, free 
trade agreements, and state-owned enterprises present to U.S. 
companies. And we will hear about the activities undertaken by 
our U.S. insurance experts in a variety of forums that 
establish international insurance standards and regulations.
    I look forward to today's hearing, and again, I welcome our 
witnesses.
    And, with that, I will turn to our ranking member, Mr. 
Gutierrez, for his opening statement.
    Mr. Gutierrez. Thank you, Madam Chairwoman, and thank you 
for holding this important hearing. I also thank the witnesses.
    I think it is very important for our Members and the public 
to learn of the progress that has been made since the creation 
of the Federal Insurance Office. This is one area of the Dodd-
Frank law where there is a great deal of consensus on both 
sides of the aisle and between the private sector and the 
Federal Government.
    Most observers of the international insurance sector agree 
that Federal action is needed in order to assist our U.S.-
domiciled insurance companies and their global affiliates to 
achieve much more equitable treatment in the global insurance 
marketplace. Not including health insurance, we in the United 
States account for at least 27 percent of all premiums in bulk 
volume, making the United States the world's largest single 
country insurance market.
    Unfortunately, our exports and even affiliate sales of 
insurance products do not correspond to our share of premium 
space. In fact, we have a serious trade imbalance in 
international insurance, and the United States receives a 
relatively low proportion of its total insurance revenue from 
international sources. As with other sectors of the economy, 
the world is quickly growing smaller and much more complex. The 
extreme complexity of modern economies presents this Congress, 
as well as regulators and supervisors, with enormous challenges 
that need to be met head-on if we are to avoid a repeat of the 
recent and continuing economic issues.
    In order to assist the U.S.-domiciled insurance industry 
achieve a level playing field both domestically and 
internationally, Congress created FIO. I am pleased that its 
first Director, who is here with us this afternoon, is former 
State of Illinois Insurance Commissioner Michael McRaith.
    And I am glad to welcome you as one of our distinguished 
witnesses today, Mr. McRaith. I am very much looking forward to 
hearing your testimony about the achievements of FIO in the 
international arena during the last few months since its 
inception.
    Madam Chairwoman, I would request unanimous consent to 
introduce into the record the March 14, 2012, letter from the 
Financial Services Roundtable to Treasury Secretary Geithner on 
international insurance issues and the role of FIO.
    Chairwoman Biggert. Without objection, it is so ordered.
    Mr. Gutierrez. Thank you.
    I think it is particularly important because this letter 
does speak to how there really is broad support. It says, ``It 
has been clear for some time that the business of insurance is 
vitally important to the underpinnings of our national economy 
and should receive proper consideration at the Federal level. 
Congress recognized the Federal Government should develop more 
expertise on insurance issues by including in Dodd-Frank the 
creation of FIO, and we support full funding and staffing. The 
establishment of FIO for the first time places an expert in the 
Department of the Treasury to increase Federal understanding of 
the business of insurance, an industry that is unique from 
other financial services, both in terms of its business model 
and regulatory requirements.''
    I thank the gentlelady.
    Chairwoman Biggert. Thank you.
    I now recognize the gentlelady from West Virginia for 2\1/
2\ minutes.
    Mrs. Capito. Thank you, Madam Chairwoman.
    I would like to thank Chairwoman Biggert and Ranking Member 
Gutierrez for continuing what is an important debate under this 
subcommittee's jurisdiction, and that is the international 
competitiveness of the U.S. insurance industry.
    I would like to thank our witnesses before us today, and I 
appreciate their input.
    I would like to welcome Director McRaith back to the 
committee and I look forward to hearing his testimony on the 
progress of the Federal Insurance Office and his office's 
representation of the United States in the international 
community. I am interested to hear how Mr. McRaith uses his 
office's broad authorities in international matters and also 
how the office consults with States on issues of domestic and 
international importance.
    We all know that the Dodd-Frank Act was implemented to 
address the flaws in our banking and security systems that led 
to the financial collapse of 2008. Throughout that time, 
however, the insurance industry as a whole was able to uphold a 
stable presence and was expected to be untouched by many of the 
laws and regulations implemented in the Act.
    Nevertheless, we are seeing that Dodd-Frank could have a 
far greater impact on many other parts of the economy than 
anticipated, including the insurance sector. The question for 
me is, will domestic regulations called for by provisions in 
Dodd-Frank adversely affect the industry and U.S. participation 
in the global market?
    FIO's voice in international regulatory affairs will be 
very significant, as effective and globally consistent 
standards could allow our U.S. markets to grow internationally 
without losing efficiencies. While the EU is currently 
modernizing its insurance industry--they have a lot on their 
hands, I would say--our understanding of how their structure 
will converge with ours can have a great impact, again, on our 
competitiveness abroad.
    In these deliberations, I think we should be mindful of 
what is in the best interests of the United States and our 
consumers. Our system of State-based regulation has proven to 
be a dependable and important model for the insurance industry, 
so it is important to keep that in mind when adopting 
international financial standards. Issues such as heightened 
capital requirements, varying accounting practices, and 
assessment of risk are all issues to be considered in an 
international framework, and how they might inhibit market 
access.
    Again, I would like to thank the Members for being here, 
and I would like to thank the chairwoman for holding the 
hearing.
    Chairwoman Biggert. Thank you.
    We have been called for our pesky votes, but I think I will 
just introduce all of the witnesses ahead of time, so that when 
we come back, we will immediately start with your testimony. 
However, we have four bills on the Floor, and the fourth one is 
the national flood insurance extension, so I am not leaving 
early from that. That bill is very important.
    We have with us the Honorable Michael McRaith, Director, 
Federal Insurance Office, U.S. Department of the Treasury; the 
Honorable Kevin McCarty, insurance commissioner, Florida Office 
of Insurance Regulation, on behalf of the National Association 
of Insurance Commissioners; the Honorable Steve Bartlett, 
president and chief executive officer, The Financial Services 
Roundtable; Mr. Peter Kochenburger, executive director, 
Insurance Law Center, and associate clinical professor of law 
and director of graduate programs, University of Connecticut 
School of Law; Mr. Allan E. O'Bryant, executive vice president, 
and head of international markets and operations, Reinsurance 
Group of America, on behalf of the Reinsurance Association of 
America; Mr. Michael Sapnar, president and chief executive 
officer, Transatlantic Reinsurance Company, on behalf of the 
Reinsurance Association of America; Mr. William Toppeta, vice 
chairman, MetLife, Incorporated; and Mr. J. Robert Vastine, 
president, the Coalition of Service Industries.
    So we will recess and come back after the four votes--I 
don't know how long it will take, but at least 20 to 30 
minutes. Thank you so much.
    [recess]
    Chairwoman Biggert. I think everybody will be back in a few 
minutes, but let's get started. I am happy to announce that the 
bill passed. So, that is just one more step in a long road.
    Director McRaith, you are now recognized for 5 minutes.

   STATEMENT OF THE HONORABLE MICHAEL T. MCRAITH, DIRECTOR, 
   FEDERAL INSURANCE OFFICE, U.S. DEPARTMENT OF THE TREASURY

    Mr. McRaith. Chairwoman Biggert, Ranking Member Gutierrez, 
and members of the subcommittee, thank you for inviting me to 
testify today. I am Michael McRaith, Director of the Federal 
Insurance Office in Treasury.
    First, we know of the interest in our modernization report. 
I want to acknowledge that it is late. Once it is released in 
the near future, we trust you will find it to be of appropriate 
depth and quality.
    The Dodd-Frank Act created the Federal Insurance Office, or 
FIO, and gave it the authority to coordinate Federal efforts 
and develop Federal policy on prudential aspects of 
international insurance matters, including representing the 
United States at the International Association of Insurance 
Supervisors (IAIS). As an office within Treasury, FIO is well-
positioned to express U.S. views and to work effectively with 
our international counterparts. As we fulfill our statutory 
mandate, we will work and consult with Commissioner McCarty and 
his State regulator colleagues as well as other Federal 
agencies and interested parties.
    The insurance sector is critical to the U.S. economy as a 
risk-transfer vehicle, as a participant in capital markets, and 
as an employer. As this hearing illustrates, FIO's creation 
could not arrive at a better time. The United States comprises 
more than 27 percent of global premium volume and is a major 
source of revenue for international insurers. The U.S. market 
itself is growing more international, and insurers generate far 
more revenue now than ever before from outside the home 
country. With these realities, the need for Federal Government 
involvement is clear.
    FIO has been involved with the IAIS since last July, and 
joined the executive committee in February. The IAIS is 
developing a methodology to identify globally significant 
insurers. FIO is, of course, also a member of the Financial 
Stability Oversight Council, or FSOC. At the IAIS, FIO's aim is 
to shape international consensus so that the IAIS criteria, 
methodology, and timing are aligned with the Council.
    We share industry concerns about the confidentiality of 
nonpublic data produced by insurers in support of the IAIS work 
and will address these concerns in the coming months. The IAIS 
is developing a common framework, or ComFrame, for the 
supervision of internationally active insurance groups. We 
support ComFrame because it will lead to improved cross-border 
supervision and understanding.
    In bilateral matters, FIO established in January an EU-U.S. 
insurance dialogue that is now led by a steering committee 
including FIO, our EU counterparts, and State regulators, 
including Commissioner McCarty. The EU Solvency II framework 
proposes an equivalence assessment of the U.S. regulatory 
system, a prospect causing uncertainty for the transatlantic 
insurance sector.
    We initiated the dialogue not to decide a winner, but to 
compare factually the two regulatory regimes. The steering 
committee has been engaged constructively and in good faith, 
meeting twice at Treasury, once in Basel, and next in 
Frankfurt. Our staffs have been engaged with information 
exchange and analyses. After ample chance for public input, we 
will finish and define the EU-U.S. path forward by the end of 
this year.
    I recently participated in the U.S.-China Strategic and 
Economic Dialogue, or S&ED, the first of many bilateral 
exchanges on insurance supervision. Iowa Insurance Commissioner 
Voss attended the S&ED at Treasury's invitation, and we enjoyed 
meeting Chairman Xiang of the China Insurance Regulatory 
Commission (CIRC). We look forward to fulfilling the commitment 
between CIRC and FIO to strengthen cooperation in the 
development and implementation of prudential regulation in the 
insurance sector. We applaud CIRC's May 1st announcement that 
it will open its market to third-party auto liability insurers, 
and I am optimistic about the growth prospects for U.S. 
insurers and brokers in China.
    Issues in Brazil, Argentina, and India illustrate the need 
to develop, implement, and enforce international insurance core 
principles.
    To be clear, in every forum, FIO priorities will be a 
strong American economy, job opportunities for the American 
people, and market opportunities for U.S.-based brokers and 
insurers. Chairwoman Biggert, I reaffirm our commitment to work 
with and to support Congress and this committee on these 
international topics that are of great local and national 
importance.
    Thank you for your attention. I am happy to answer any 
questions.
    [The prepared statement of Director McRaith can be found on 
page 57 of the appendix.]
    Chairwoman Biggert. Thank you so much, Director.
    Mr. McCarty, you are recognized for 5 minutes.

  STATEMENT OF THE HONORABLE KEVIN M. MCCARTY, COMMISSIONER, 
   FLORIDA OFFICE OF INSURANCE REGULATION, ON BEHALF OF THE 
     NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)

    Mr. McCarty. Chairwoman Biggert, Ranking Member Gutierrez, 
and members of the subcommittee, thank you for the opportunity 
to testify today.
    Chairwoman Biggert, I want to again thank you for 
participating in our commissioners' meeting last month. We 
appreciate your support and leadership.
    My name is Kevin McCarty. I am the insurance commissioner 
of the State of Florida and the NAIC president. I present this 
testimony on behalf of the NAIC. Today, I will provide the 
committee with an overview of the NAIC's involvement in recent 
international discussions, including standard setting, trade 
and economic development, and enhancement of regulatory 
communications.
    As the United States is the world's largest insurance 
market, with more than a third of the global market share, 
insurance is key to our economy. State regulators provide 
international leadership by setting strong standards and 
developing creative solutions to regulatory challenges while 
focusing on protecting our policyholders.
    As a founding member of the IAIS, State regulators and the 
NAIC staff serve in various leadership roles, ensuring our 
system has a prominent voice as we discuss global insurance 
principles and standards. We look forward to hosting the IAIS 
annual conference here in Washington this October.
    We were integral in the development of the updated IAIS 
insurance core principles, which provide the basis for the IMF 
insurance-sector assessment. When the IMF last assessed the 
U.S. regulatory system in 2010, it found our strong regulatory 
system contributed to the overall resilience of the insurance 
sector during the financial crisis. An IAIS priority is the 
development of ComFrame for the supervision of internationally 
active insurance groups. If done right, ComFrame has the 
potential to create more robust oversight while respecting 
differences among jurisdictions.
    In addition to the IAIS, the NAIC is actively involved in 
the OECD and the Financial Stability Board and through the 
Joint Forum, currently chaired by NAIC CEO Dr. Terri Vaughan.
    We are pleased to work alongside my friend and colleague, 
FIO Director Mike McRaith, on many of the international 
efforts. FIO has an important role as a representative of the 
Federal Government in these discussions. We are building a 
constructive relationship, which is crucial since State 
regulators retain ultimate responsibility for implementing any 
new international standards. It remains critical that any 
discussions or agreements on regulatory prerogatives be made 
with the full cooperation of the States.
    The insurance sector plays a significant role in promoting 
economic development. This demands a level playing field here 
and abroad in order to create and protect jobs in the United 
States. With that in mind, international trade and trade 
agreements are very important. As the USTR negotiates 
agreements such as the ongoing TPP agreement, and seeks to 
improve market access for U.S. insurers, the NAIC provides 
necessary technical expertise and advice.
    Our partnership with the USTR dates back to the early 
1990s, when NAFTA and GATT were negotiated. In providing expert 
guidance to the USTR for the last 2 decades, State regulators 
and the NAIC have sought to promote stable practices and 
emphasize the successful track record of the U.S. markets. We 
illustrate to our trading partners the importance of insurance 
to our economy in terms of jobs, economic output, and risk 
mitigation for consumers.
    Through the NAIC, State insurance supervisors are actively 
involved in technical assistance programs with foreign 
regulators. As we consider harmonization of approaches, we must 
remember that regulatory convergence should focus on outcomes 
and not prescriptive requirements or structures.
    A prime example of our work in this area is the decade-long 
NAIC-EU regulatory dialogue. These exchanges have been 
essential to enhancing supervisory understanding between our 
respective jurisdictions. Just last month, I joined several 
State regulators and our colleagues from FIO for a week of 
U.S.-EU events to discuss issues of mutual concern. These 
exchanges and dialogues are critical to successfully improving 
the framework for regulation globally.
    As we continue to work with our international counterparts, 
State regulators cannot abdicate our responsibility to consider 
the impact of regulatory convergence on the U.S. marketplace 
while ensuring that differences in regulations do not become an 
unnecessary barrier to trade.
    In conclusion, increased regulatory collaboration and 
cooperation enhances well-regulated and competitive markets, 
providing policyholders better choices and stability. We will 
continue to coordinate with FIO, the USTR, and our 
international partners to promote open, competitive, stable, 
and well-regulated markets around the world.
    Thank you, and I look forward to your questions.
    [The prepared statement of Commissioner McCarty can be 
found on page 46 of the appendix.]
    Chairwoman Biggert. Thank you so much.
    Mr. Bartlett, you are recognized for 5 minutes.

STATEMENT OF THE HONORABLE STEVE BARTLETT, PRESIDENT AND CHIEF 
      EXECUTIVE OFFICER, THE FINANCIAL SERVICES ROUNDTABLE

    Mr. Bartlett. Thank you, Chairwoman Biggert, Ranking Member 
Gutierrez, members of the subcommittee, Mr. Watt, Mr. Hurt, and 
Mr. Dold.
    My name is Steve Bartlett. I am president and CEO of The 
Financial Services Roundtable (the Roundtable). We are a 
national trade association of 100 of the Nation's largest 
banking, securities, and insurance firms. Thirty of our 100 
companies are principally in the business of insurance, but I 
will say that each one of our 100 companies are engaged in the 
business of insurance in rather significant ways.
    Making the U.S. insurance sector more competitive at home 
and abroad is critical to sustaining our economic recovery. 
U.S. insurance companies create jobs in every congressional 
district; finance municipal, State, and Federal investment; 
help small and large businesses mitigate risk; and support 
individuals and families when they need it.
    And it is really about the economy. Insurance is an 
essential part of every single element of the economy. Without 
insurance, people could not drive cars, eat in restaurants, or 
buy homes; cities could not build bridges or highways; and a 
company could not build plants or create jobs. So, insurance is 
not a ``want to have;'' it is essential.
    My testimony will highlight four priorities that I think 
this committee should focus on and four priorities that will 
materially affect the U.S. insurance sector's international 
competitiveness: the role of the Federal Insurance Office; the 
designation of SIFIs and G-SIFIs; domestic regulations that 
hinder U.S. competitiveness; and expanding U.S. insurers' 
access to markets around the globe.
    First, the Federal Insurance Office. A strong, effective 
Federal Insurance Office will enhance U.S. insurers' ability to 
compete internationally, and they also help U.S. consumers. To 
that end, The Roundtable publicly and directly supports an 
increase in FIO's funding, staffing, and levels in stature to 
the levels contemplated by Dodd-Frank.
    FIO can fill the void in international negotiations, a void 
that has long existed. Section 502 of Dodd-Frank establishes 
FIO with that international aspect specifically in mind. And I 
will quote parts of it: ``The office--FIO--shall have the 
authority to coordinate Federal efforts and direct Federal 
policy on prudential aspects of international insurance 
matters, including representing the United States, as 
appropriate, in the International Association of Insurance 
Supervisors and assisting the Secretary in negotiating covered 
agreements.''
    Second, SIFIs and G-SIFIs. Designation of SIFIs and G-SIFIs 
should be coordinated between domestic and international 
regulators. We shouldn't have one on one side of the Atlantic, 
another on the other side of the Atlantic, and a third in Asia. 
It is important that global regulators not upset the careful 
work of U.S. regulators designed for domestic purposes to 
identify SIFIs. International and domestic regulators should 
coordinate their rules to prevent redundant and conflicting 
regulations. Applying multiple regulatory standards to 
international insurance groups would require companies to 
comply with redundant and often contradictory regulations, 
would create additional deadweight cost that would be passed 
along to the consumers, and would deny consumers insurance.
    Third, domestic regulations should not be allowed to harm a 
U.S. insurer's ability to compete internationally. 
Specifically, any new capital requirements for insurance 
companies should be insurance-sector-specific. Administering 
identical stress tests to insurance companies and bank holding 
companies confuses the risk profiles of both.
    And, fourth, FIO's expertise will complement USTR's efforts 
to eliminate barriers to foreign insurance markets. FIO's 
participation in future trade dialogues will increase insurance 
expertise and enhance the good work of the USTR.
    I have a few specific countries I will cite. The 
Administration should, as they have, and FIO, continue to 
engage China through the S&ED. The opening of access for 
China's auto insurance market was a good step forward, but U.S. 
insurers still need the ability to open branches concurrently 
rather than one at a time. And China should be asked to lift 
its moratorium and clear the backlog for new license approvals 
for foreign firms offering retirement security products and 
enterprise annuity and group annuity products. That would be 
good for the Chinese people and good for the world as a whole. 
The FIO Director successfully participated in the most recent 
S&ED, and his influence and presence was felt in a positive 
way.
    The same with Brazil, which in 2010 promulgated some new 
trade barriers to reinsurance regulations that we need to 
address and get eliminated. And then last is, India opened its 
insurance market 12 years ago, but only opened it to 26 percent 
direct investment, which means it is not open at all.
    Madam Chairwoman, uniform, coherent, and strong insurance 
regulation will impact the U.S. economy in a positive way. And 
I thank both you and your committee for your efforts in that 
area.
    [The prepared statement of Mr. Bartlett can be found on 
page 32 of the appendix.]
    Chairwoman Biggert. I thank you, Mr. Bartlett.
    Mr. Kochenburger, you are recognized for 5 minutes.

STATEMENT OF PETER KOCHENBURGER, EXECUTIVE DIRECTOR, INSURANCE 
   LAW CENTER, AND ASSOCIATE CLINICAL PROFESSOR OF LAW, THE 
            UNIVERSITY OF CONNECTICUT SCHOOL OF LAW

    Mr. Kochenburger. Thank you. Good afternoon. My name is 
Peter Kochenburger, and I am a professor at the University of 
Connecticut School of Law, and the executive director of our 
school's Insurance Law Center. Thank you for this opportunity 
to testify today.
    I would like to use my time to address two issues: first, 
FIO's necessary role in representing U.S. regulatory interests 
internationally; and second, a request that Congress and 
Federal and State regulators remain vigilant in maintaining 
important consumer protection standards in the United States as 
they work closely with their counterparts throughout the world.
    Others have very well addressed the challenges insurance 
regulators face. These include an increasingly global business, 
historically regulated at the regional and national level, and 
the traditional segregation of regulatory authority over 
insurers, depository institutions, investment firms, and other 
financial services providers.
    We can and should acknowledge the tremendous effort and 
many successes that the NAIC and State insurance regulators 
have achieved in addressing these challenges, bringing far 
greater regulatory consistency domestically and representing 
U.S. regulatory interests abroad. The U.S. insurance sector is 
by far the largest in the world and one that has suffered 
relatively minor disruptions over the last several decades, at 
least compared to our other financial services markets. State 
regulators deserve much of the credit for this stability.
    However, institutionally, only the Federal Government has 
the authority and national perspective to represent our 
country's regulatory interests internationally and negotiate 
insurance-related trade agreements. FIO was established with 
this specific role in mind when it was created in 2010. And, 
while still a work in progress, its mission is indispensable 
and cannot be undertaken by State-based or private entities. 
The trends that have been discussed here and at many other 
hearings over the last several years will likely only increase, 
as will the need for Federal knowledge and participation in 
various regulatory arenas.
    Perhaps the best example I can provide as to why FIO has a 
vital role to play internationally is the general consensus 
represented at today's hearing. Rarely have representatives of 
major insurers, prominent professional organizations, the NAIC, 
and consumer advocates appeared on the same panel with a 
similar message.
    My second topic is one we have not heard about today, and 
that is consumer protection. Few would argue with the merits of 
collaboration and modernization, yet these virtues should not 
become code words for deregulation, and international 
cooperation should not be an opportunity or rationale to dilute 
consumer protection standards in the United States. While 
insurance regulation in the United States has significant gaps, 
we also have a tradition of consumer protection at the State 
and often the Federal level more rigorous than that found in 
many other countries.
    We do not need to look far in the past to see how these 
arguments have been utilized previously. The optional Federal 
charter legislation, a recent modernization initiative put 
forth by some industry groups, would not only have altered the 
current and often effective regulatory balance, it would have 
eliminated important consumer protection standards that have 
existed for decades.
    As international cooperation increases, we will likely hear 
arguments about how modern regulatory systems in other 
jurisdictions depend largely on market forces rather than 
vigilant and empowered regulators to protect policyholders and, 
therefore, should be imported to the United States. Please be 
cautious about such arguments. We have heard them before and 
often with ill effect when adopted.
    I do not say this to be critical of an industry that is not 
only necessary to our country and economy but also one which 
has served it with honor. However, while enlightened industry's 
self-interest is to be expected, we cannot accept on their face 
the positions it advocates, which should be carefully reviewed.
    State insurance regulation creates delays and duplication 
of effort by both the insurance industry and insurance 
regulators. That is indisputable. However, we have a 
constitutional structure that acknowledges significant State 
regulatory authority, and Federalism necessarily assumes a 
certain degree of duplication and inefficiency. The question is 
whether these costs are worth the benefits, not whether the 
existence of these costs is an excuse by itself to reduce State 
regulatory control.
    The benefits of insurance cannot be overstated, but their 
importance is exactly why it is necessary to regulate it 
carefully to ensure that policyholders obtain their benefit of 
the insurance bargain. The primary focus in evaluating 
insurance regulation, whether internationally or at the 
domestic level, should not be on market efficiency or claims of 
international comity but on effectiveness in protecting 
policyholders and our national economy.
    Thank you for your time.
    [The prepared statement of Professor Kochenburger can be 
found on page 38 of the appendix.]
    Chairwoman Biggert. Thank you.
    I now recognize the gentleman from Missouri, Mr. Clay, for 
an introduction.
    Mr. Clay. Thank you, Madam Chairwoman, and thank you for 
conducting this hearing.
    I would like to welcome Mr. Allan O'Bryant from the 
Reinsurance Group of America (RGA). RGA is headquartered in my 
home State of Missouri, and has over 700 employees and growing 
in Missouri, and a total of over 1,700 employees worldwide.
    Mr. O'Bryant, I know you head up RGA's international 
markets and operation and have flown all the way from Japan to 
join us today.
    Mr. O'Bryant technically covers all international, but 
given that he is based in Japan, his focus is more on Asia, 
where he is in charge of, at a minimum, Japan, Hong Kong, 
Korea, India, Malaysia, Taiwan, Thailand, and China.
    Thank you so much for making such a long trip and for 
providing your valuable input today. We look forward to your 
testimony.
    And I yield back, Madam Chairwoman.
    Chairwoman Biggert. Thank you.
    And thank you so much for that trip to come here, Mr. 
O'Bryant. You are recognized for 5 minutes.

 STATEMENT OF ALLAN E. O'BRYANT, EXECUTIVE VICE PRESIDENT, AND 
HEAD OF INTERNATIONAL MARKETS AND OPERATIONS, REINSURANCE GROUP 
     OF AMERICA, INC. (RGA), ON BEHALF OF THE REINSURANCE 
                  ASSOCIATION OF AMERICA (RAA)

    Mr. O'Bryant. Thank you.
    Thank you, Congressman Clay, for the introduction.
    I am testifying today on behalf of the Reinsurance 
Association of America, a national trade association 
representing life, property, and casualty reinsurers. And I 
would like to thank Chairwoman Biggert and Ranking Member 
Gutierrez for holding this important hearing today.
    RGA is the largest U.S.-based life reinsurer. Our products 
include individual and group life reinsurance, living benefit 
reinsurance, and specialized underwriting to help individuals 
with unique health problems obtain the life insurance coverage 
they need to protect their families. We are headquartered in 
St. Louis, Missouri, and have operations in 25 countries.
    Our clients are many of the life insurance companies you 
hear about every day. Insurers use our services to promote 
their volume of business, reduce volatility from catastrophic 
events, help meet regulatory requirements, and enhance their 
general financial strength. Reinsurance is truly a global 
product. Indeed, 49 percent of the life insurance RGA reinsures 
is for persons living outside the United States.
    Today, I would like to address three issues crucial to the 
life insurance sector's, or the U.S. insurance sector's, 
international competitiveness and our ability to expand abroad 
while creating more jobs here at home: first, the need for a 
level playing field in international reinsurance laws and 
regulations; second, the challenges of competing with State-
owned insurance and reinsurance companies receiving 
preferential treatment; and third, the positive impact of free 
trade agreements on insurance and reinsurance.
    In addition to those issues, the RAA strongly supported the 
establishment of the Federal Insurance Office. The 
international competitiveness of U.S.-based firms depends in 
part on a functioning governmental entity empowered to engage 
foreign governments and regulators on insurance and reinsurance 
matters and to advocate on behalf of U.S. consumers and 
companies operating abroad. We are encouraged by Director 
McRaith's participation in the EU-U.S. transatlantic dialogue 
as well as the meeting of the International Association of 
Insurance Supervisors.
    Reinsurance is a global business. Insurance laws and 
regulations in foreign markets should not favor local insurers 
and reinsurers over multinational or U.S.-based companies like 
RGA.
    For example, some markets abroad have so-called seasoning 
requirements essentially barring companies from obtaining 
licenses until they have been in business for a prescribed 
number of years. This requirement does not bring about 
healthier insurance markets because it is blind to other 
virtues of a company, such as the quality of the assets or of 
its management team. Rather, it limits the number of companies 
able to provide services, resulting in a less efficient, less 
competitive insurance market.
    Regarding oversight, we agree that supervision of insurance 
groups should be improved. However, creating unified standards 
only for a select group of insurers and reinsurers is setting a 
double standard.
    In the domestic market, we look to our insurance regulators 
and officials to ensure that U.S.-based insurers can also 
compete on a regulatory level playing field here at home. To 
this end, we recommend that the FIO be required to use its 
ability to preempt State measures to ensure competitive 
equivalence in the U.S. market between U.S. and non-U.S-based 
firms. Under Dodd-Frank, FIO can only preempt State measures 
that discriminate against U.S. companies. There is nothing in 
the law ensuring that U.S.-based firms will not be 
discriminated against.
    Second, competing with the government-owned insurance and 
reinsurance companies abroad is proving to be a problem in many 
important emerging markets such as China, India, Brazil, and 
Korea. There should be equal regulatory treatment of private 
and state-owned insurance and reinsurance firms, but this isn't 
always the case. State-owned companies frequently benefit from 
more lenient supervision. What is more, if the International 
Association of Insurance Supervisors eventually sets higher 
standards of scrutiny, entities in these countries may be 
excused from new standards if they only operate in one or two 
countries. While we do not object to state-owned insurers and 
reinsurers, standards need to be applied equally.
    And, finally, we applaud the free trade agreements with 
Korea, Colombia, and Brazil. Benefits can include protection 
and enforcement of agreements to protect confidential 
information exchanged between U.S. and foreign insurance 
regulators for proper regulatory oversight. We are especially 
hopeful that the privacy and data transfer provisions of the 
U.S.-Korea Free Trade Agreement will address the differences in 
data protection rules currently existing between the United 
States and Korea. The test of these agreements will be in the 
creation and the enforcement of laws and regulations within 
each participating country consistent with the terms of the 
agreement.
    Thank you again for the opportunity to comment on these 
issues, and I look forward to your questions.
    [The prepared statement of Mr. O'Bryant can be found on 
page 64 of the appendix.]
    Mr. Hurt [presiding]. Thank you, Mr. O'Bryant.
    Mr. Sapnar, you are recognized for 5 minutes. Thank you.

 STATEMENT OF MICHAEL C. SAPNAR, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, TRANSATLANTIC REINSURANCE COMPANY, ON BEHALF OF THE 
            REINSURANCE ASSOCIATION OF AMERICA (RAA)

    Mr. Sapnar. Good afternoon. My name is Mike Sapnar, and I 
am the CEO of Transatlantic Reinsurance Company. I am here on 
behalf of my company and the Reinsurance Association of 
America. I am grateful for the opportunity to address the 
subcommittee on the impact of regulatory impediments on U.S. 
reinsurance companies.
    As you know, there is not a long list of U.S.-domiciled 
reinsurers with global operations. Our written statement 
details the reasons why this list is short. That aside, I would 
like to focus my comments using Transatlantic as a practical 
example on four of these issues: increased protectionist 
regulatory policies abroad; increased regulatory oversight of 
reinsurance abroad; the historical absence of a Federal 
advocate for reinsurance in the United States; and the tax 
disadvantage of U.S.-domiciled reinsurers.
    First, there are two facts that underscore the gravity of 
these issues. One, there were five major worldwide property 
catastrophe losses in the last 24 months, totaling over $125 
billion. Sixty-two-and-a-half percent of these losses will be 
paid by reinsurers, and 97 percent of that amount will be paid 
by reinsurers outside the country in which the loss occurred. 
Two, of the 50 new global reinsurers formed since 2001, exactly 
none were formed in the United States In fact, since 1989, no 
new global reinsurer has chosen the United States as its home 
domicile.
    Transatlantic, founded in 1978, is the leading global 
property and casualty reinsurer domiciled in and regulated by 
the State of New York. We are licensed in all 50 States as well 
as in many countries around the world. We have one main 
operating company in New York and a global network of 17 
branches. This structure provides a strong single-balance-sheet 
approach, allowing us to deliver a cost-effective product while 
offering local service and superior financial security.
    Despite the global capital role that reinsurance plays, 
Transatlantic has encountered protectionism policies in many 
foreign jurisdictions, notably Asia and Latin America. These 
barriers include: limitations for foreign companies on direct 
investments and domestic entities; mandatory cessions by local 
reinsurers to specified reinsurers; right of first refusal for 
domestic reinsurers; punitive minimum capital requirements; and 
restrictions on cross-border flows. Often, the countries 
imposing these barriers are emerging insurance markets.
    Transatlantic does not suggest that the United States 
consider retaliatory policies. Instead, our collective goal 
should be to educate developing insurance markets on the value 
of free trade, regulation without strangulation, and the 
syndication of risk. We believe the Federal Insurance Office 
can play an important advocacy role on this issue and 
elsewhere.
    In particular, the FIO can play an important role in 
helping U.S. companies address overseas regulatory issues. 
Following the 2008 financial crisis, foreign regulators are 
more aggressive in how they oversee U.S. reinsurance branches. 
One such example is the proposed implementation of the EU's 
Solvency II directive and its threat to our operations.
    We have three branch offices in Europe operating off our 
single balance sheet; thus, we do not have to segregate our 
capital. This mitigates infrastructure costs, currency issues, 
and value-added taxes. In addition, clients receive local 
service while tapping our full financial resources. Regulators, 
meanwhile, can interface with local company contacts and 
readily access records for inspection and oversight.
    Nevertheless, the U.K. regulator has pointed to the fact we 
do not have a solitary U.S. insurance regulator to coordinate 
with when setting the strategy for the regulation of U.S. 
reinsurance branches under this new directive. They noted that 
regulation of U.S. insurers varies by State. They felt their 
only options were to either apply their own regulatory scheme 
on an extraterritorial basis or require a separately 
capitalized subsidiary in the EU which could be consistently 
regulated under Solvency II.
    With this new approach, Transatlantic faces a difficult 
choice: close our U.K. branch to avoid dual regulation by the 
U.K. FSA and the New York Department of Financial Services or 
establish a U.K. subsidiary with separate infrastructure, 
capital, and increased costs.
    Ironically, during this same period, the NAIC in several 
States was focused on relaxing the regulation of foreign 
reinsurers. Thus, while U.S. companies are faced with 
heightened requirements in the EU, U.S. regulators are lowering 
barriers at home.
    An active FIO would serve three purposes here: one, 
advocate on behalf of all U.S.-domiciled companies for fair 
treatment in international jurisdictions; two, provide a single 
gate for foreign regulators to interface with U.S. insurance 
regulators; and three, coordinate policies at home with issues 
abroad. We cannot stress enough the potential value in these 
three areas of a well-resourced single U.S. regulator.
    Finally, the United States needs to narrow the tax 
disparity. The United States has the highest corporate tax rate 
in the world, combined with the punitive treatment of 
controlled foreign corporations. Companies like us face a 
higher cost of capital over time. Lowering the tax rate or 
amending the taxable base will not only allow domestic 
companies to better compete globally; it will encourage new or 
existing reinsurers to locate here. In fact, a revised 
corporate tax structure with an empowered Federal advocate 
would be a compelling environment for many reinsurers, which 
would bring both jobs and capital to the United States.
    Thank you very much.
    [The prepared statement of Mr. Sapnar can be found on page 
76 of the appendix.]
    Mr. Hurt. Thank you, Mr. Sapnar.
    Mr. Toppeta, you are recognized for 5 minutes.

 STATEMENT OF WILLIAM J. TOPPETA, VICE CHAIRMAN, METLIFE, INC.

    Mr. Toppeta. Thank you, Mr. Chairman, and members of the 
subcommittee. My name is Bill Toppeta, and I am vice chairman 
of MetLife.
    You likely know MetLife as the largest life insurer in the 
United States. In recent years, we have grown to be a leading 
global provider of life insurance, annuities, and employee 
benefit programs, serving 90 million customers in over 50 
countries.
    In 2011, our businesses outside the United States 
contributed approximately 35 percent of MetLife's earnings. I 
am here today to speak on behalf of a level regulatory playing 
field for U.S. insurers throughout the world.
    Our recommendations are straightforward. First, 
policymakers should carefully weigh the impacts of duplicative 
or conflicting regulations. Second, insurance should be 
regulated as insurance, not as banking. And third, policymakers 
should address non-tariff barriers impacting insurers operating 
abroad through trade agreements and intergovernmental 
dialogues.
    It is hard to imagine an industry that has more layers of 
regulation than life insurance, and that situation appears to 
be getting worse, not better. Although we favor good, strong 
regulations, multiple layers can actually be self-defeating, to 
say nothing of confusing and expensive.
    The intersection of international and domestic policies and 
standard-setting creates an increasingly complex global 
regulatory environment. Duplicative or conflicting regulations 
may inhibit growth and fail to address the very issues they 
were intended to cure. This situation may negatively affect the 
competitive position of U.S. insurers.
    I will provide a couple of examples to illustrate my point. 
One is the Solvency II directive in the European Union. A 
component of Solvency II is a greater focus on group 
supervision. Since many EU insurance groups also have 
businesses in other countries, the EU proposes to assess the 
equivalence of these third-country supervisory regimes.
    It will not surprise you to learn that, as a large U.S.-
based insurer with operations in Europe, MetLife would like to 
see the EU recognize the U.S. as equivalent for Solvency II 
purposes. We would argue that regulators should focus on the 
outcomes provided by regulation rather than on the structure of 
the regulatory system. We are wary of premature arguments for 
regulatory convergence. What we need at this stage is 
consistency achieved through mutual recognition of the outcomes 
of our respective systems, rather than pressure to replicate or 
adapt models from other countries.
    Congress is in an excellent position to elevate the U.S.-EU 
dialogue on equivalence. The congressional spotlight can be 
shown on the benefits of mutual recognition which flow to 
consumers, EU and U.S. businesses, regulators, and our two 
economies. Whenever transatlantic dialogues take place, it will 
be helpful to hear a chorus of congressional support for 
cooperation on insurance regulation. The world's two largest 
insurance markets deserve the level playing field that will 
come from mutual recognition.
    Let me turn now to a trade example. One of the ways 
countries seek to protect their domestic industries is by 
restricting foreign direct investment in certain sectors, 
usually for a limited period of time. Two of the world's 
largest markets, India and China, maintain tight restrictions 
on FDI and life insurance. In India, foreign insurers are 
limited to 26 percent ownership, and in China, the limit is 50 
percent. This means that companies like MetLife who operate in 
two of the world's fastest-growing markets must identify local 
partners to invest in and jointly govern their operation. No 
similar restriction applies to Chinese or Indian companies 
operating here.
    FDI caps are particularly challenging for life insurers 
because we must commit substantial capital not only to bricks 
and mortar, marketing and distribution of our product, but even 
more so to backing up the financial guarantees we make to our 
customers. The initial investment period for starting up new 
life insurance ventures can span several years, and local 
investors may not always have the patience or the capital to 
sustain such long-term investment.
    Reduction or elimination of FDI caps in these key markets 
will take the concerted effort of our government through all 
available channels. Congress is in an excellent position to 
keep the spotlight on this issue and to support ongoing efforts 
by the White House, USTR, and the Departments of State and 
Treasury to eliminate or reduce FDI caps.
    Let me conclude by affirming that American companies are 
innovative, and American workers are highly productive. Given a 
fair chance, with a fair, level regulatory playing field, we 
can compete and win against anybody in the world.
    Thank you for your attention, and I look forward to your 
questions.
    [The prepared statement of Mr. Toppeta can be found on page 
93 of the appendix. ]
    Mr. Hurt. Thank you, Mr. Toppeta.
    Mr. Vastine, you are recognized for 5 minutes.

STATEMENT OF J. ROBERT VASTINE, PRESIDENT, COALITION OF SERVICE 
                        INDUSTRIES (CSI)

    Mr. Vastine. Thank you very much, Mr. Hurt, and thank you, 
members of the subcommittee.
    For the record, I would like to thank Chairwoman Biggert 
for her work as co-chair of the Congressional Services Caucus. 
We deeply appreciate her and her staff's understanding of the 
importance of the services sector, the country's biggest 
employer.
    The United States is the world's largest services exporter. 
Exports reached $588 billion with a surplus of almost $200 
billion in 2011. That is a new record. U.S. cross-border 
insurance exports, as the chairman pointed out at the outset, 
accounted for only 2.6 percent of those exports, or about $15 
billion. But insurance cross-border exports understate the very 
substantial role of our insurers in global markets through 
overseas affiliates, where sales were $60 billion in 2009 in 
official statistics. We have reason to believe that this is an 
understatement in itself.
    Although our exports are strong, a recent study by Dr. Brad 
Jensen at the Peterson Institute estimated that the United 
States has the potential to export far more and that 3 million 
more U.S. jobs could be created if we can remove the many 
complex foreign barriers to our services trade. And here is 
where we certainly need the coordinated help of the FIO and the 
U.S. Trade Representative and other agencies.
    CSI was founded 30 years ago to bring services to the 
forefront of the U.S. trade agenda, and we believe we have 
achieved that goal. And so, it is appropriate to appear today 
with Bill Toppeta, our chairman.
    There are now numerous opportunities, new opportunities in 
which CSI and its members vigorously engage to promote 
insurance trade and investment, including the International 
Services Agreement being discussed in Geneva, the Trans-Pacific 
Partnership being negotiated this week in Dallas, the U.S.-EU 
High-Level Working Group, as Bill has described it, and there 
are others.
    In all services negotiations, the most important objective 
is to achieve access to foreign markets. And this means the 
right to establish your business, to own it fully, to use the 
corporate forum most suitable to the market, and to operate in 
a transparent regulatory environment. Equally important is the 
right to get the same regulatory treatment that a local company 
gets. This is, of course, known as national treatment.
    A recent example of a market access issue on which progress 
has been made is that of the auto insurance market in China. 
After years of engagement by the U.S. Government and industry, 
China finally agreed to open this market--recently at an S&ED 
conference, actually. More work must be done to make the 
promise a reality. We deeply appreciate the work of the U.S. 
negotiators who will, we are sure, secure this commitment.
    Bill Toppeta has mentioned the issue of equity caps, and I 
won't repeat those. In China, in India, and in other markets, 
equity caps are a major deterrent to foreign direct investment 
and to local economic growth.
    In addition to these market access issues, we are now 
confronting what we call our 21st-Century issues. One of the 
most important of these is foreign government policies that 
favor state-owned enterprises--for example, national postal 
services. The sale of insurance through post offices is a 
growing problem. For instance, Japan Post is a 100 percent 
government-owned postal entity that offers regular mail service 
but also insurance and banking and other services, which all 
are in direct competition with private sector companies, 
including our companies. The Japanese Diet recently passed 
legislation that will expand the favorable treatment provided 
to Japan Post insurance and make it easier for it to offer 
products on a discriminatory basis.
    CSI and the U.S. Chamber of Commerce have collaborated 
recently to bring to the forefront this issue and to actually 
table language--to urge our government to table language which 
is now being discussed in the Trans-Pacific Partnership 
negotiation as a foundation for a global standard.
    Freedom of data flows is absolutely essential, and it is 
another 21st-Century issue. It underpins our huge services 
exports. Our roughly $600 billion of services exports depend on 
the ability of data to move. Digital trade, we call it--digital 
enablement of services trade.
    For example, many countries are attempting to require that 
all financial services data, including insurance data, be 
processed and stored in-country. The Korean agreement, as has 
been pointed out, for the first time contains the provision 
that insurance companies may process data outside Korea. Again, 
our negotiators in the TPP are working to ensure that 
requirements are not placed on the location of servers and that 
data flows are not unnecessarily interrupted.
    Finally, another 21st-Century issue is forced localization, 
which occurs when a country requires multinational companies to 
conduct their business activities domestically, requiring that 
business processes or hiring be conducted in-country. For 
instance, Brazil is forcing the localization of reinsurance, 
and Argentina has taken many steps to force global insurances 
to localize within that country.
    All of these issues and more demonstrate the necessity of 
the FIO and the trade agencies and the huge agenda ahead. Thank 
you very much.
    [The prepared statement of Mr. Vastine can be found on page 
104 of the appendix.]
    Mr. Hurt. Thank you, Mr. Vastine.
    I will now yield myself 5 minutes.
    I wanted to see if I could get an answer from Mr. Toppeta 
and Mr. Bartlett on this question, and then maybe also hear 
from Mr. McRaith and Mr. McCarty.
    As we look at, in the future, the designation of certain 
companies as SIFIs and G-SIFIs, I would like to know 
specifically what concerns the industry has in terms of 
recognizing the difference in the business models between 
banking and insurance? And what should we be looking at toward 
minimizing the consequence of those designations in terms of 
global competition?
    If we could, Mr. Toppeta, and then Mr. Bartlett. And then, 
if we have time, I would love to hear from Mr. McRaith and Mr. 
McCarty.
    Mr. Toppeta. Thank you, Mr. Chairman.
    I would say this: The basis of all of this is that the 
business models of banking and insurance are considerably 
different.
    In insurance, we start with our liabilities. We start with 
the promises we make to our policyholders, and those are our 
liabilities in the future. We have to then match those with 
long-term assets. Because we make long-term promises that we 
are going to pay on 20 or 30 years in the future, we have to 
have long-term assets to go with them.
    We do not have the same business model as banks who borrow 
money short, in effect, and invest long. We do not have the 
same liquidity issues that banks have. Banks can suffer 
literally runs on banks, where customers come in and ask for 
their deposit. We have in our policies protections against that 
so that we have surrender charges, penalties if someone is 
going to surrender early; there are tax consequences of 
surrendering early.
    So I would say the two business models are different. And, 
therefore, in all of our regulations, we have to make very sure 
that we are regulating insurance as the business of insurance, 
not as banking.
    Mr. Hurt. Thank you.
    Mr. Bartlett?
    Mr. Bartlett. The business models are entirely different. 
The Dodd-Frank and SIFIs were written, in all fairness, 
primarily with the banks and bank holding companies in mind. 
But, nevertheless, it did mandate to the Treasury and to the 
FSOC to consider all types of financial institutions, and so 
that is what they are going to do.
    There are a lot of tests in the law as to what makes a 
SIFI, but the biggest one, it seems to me anyway, is 
interconnectedness. And we have all spent a lot of time 
commenting on that, but interconnectedness sort of takes center 
stage in that.
    I think what is facing FIO now--and I believe FIO is and 
should concentrate on this--is to be sure that the G-SIFIs in 
Europe and SIFIs in the United States, that definition is as 
close to exactly the same as possible or at least quite 
concurrent and quite compatible. It is hard enough to figure 
out what is an interconnected, systemically risky company, but 
if you have to have figure that out with two different 
definitions on two sides of the Atlantic, then it would create 
confusion and add to systemic risk rather than diminish it.
    Mr. Hurt. Thank you, Mr. Bartlett.
    Mr. McRaith?
    Mr. McRaith. Yes, Mr. Chairman. To add to what the prior 
panelists have said, if we look at what happens when a 
traditional bank fails and when a traditional insurer fails, 
that really depicts the most graphic difference. If a bank 
fails, there is the potential for an immediate run on all 
assets of that bank. And the liquidity problem may mean the 
bank doesn't have sufficient liquidity to meet the demands of 
the run. When a traditional insurance business fails, not every 
car owner, for example, is going to get into a car accident 
immediately upon failure. Not every individual is going to seek 
death when its life insurer fails. So, there is not that same 
prospect of a run. They are very different business models with 
very different consequences in the event of failure.
    At the Federal Insurance Office, we are not only involved 
with the Financial Stability Oversight Council, we are involved 
at the IAIS, where the process is being developed to identify 
globally significant insurance institutions. We are working to 
align the criteria, the methodology, and the timing of both of 
those processes so that no U.S.-based insurer is disadvantaged 
through the global designation process.
    Mr. Hurt. Mr. McCarty, would you like to just comment 
briefly? My time is about up.
    Mr. McCarty. Yes, and I will make this brief, Mr. Chairman.
    I do agree that not only is the business model different, 
but the regulatory model is different and has a stringent 
regulatory regime. And it also, because of the nature of 
insurance, gives more opportunity for the companies to rebound 
and not have the same reaction that you would in the case of a 
bank.
    We contend that banks have historically been risky, 
systemically risky, when traditional insurance has not been. 
And we would think that the solution would be to wall off the 
insurance entities to prevent them from being systemically 
risky.
    Mr. Hurt. Thank you, Mr. McCarty. My time has expired.
    I recognize Mr. Clay from Missouri for 5 minutes.
    Mr. Clay. Thank you, Mr. Chairman.
    Mr. O'Bryant, what types of barriers to entry in the 
foreign markets have U.S. firms faced? And could you give any 
particular instances or identify countries where it may be more 
difficult to enter those markets?
    Mr. O'Bryant. Yes, Congressman Clay. One barrier that we 
are actually considering and facing right now is with the 
country of Brazil. Just in the last year-and-a-half, they have 
strengthened their own internal requirements that require more 
of any type of reinsurance be allocated to the state-owned 
insurance reinsurer. That, along with high capital requirements 
to enter the market, make that market extremely difficult for 
us to enter into and to be profitable. So, it actually limits 
the capacity that we could offer to local insurers to write 
more business.
    Mr. Clay. And would you share with us your recommendations 
to correct some of the barriers? How would you recommend it 
being done differently?
    Mr. O'Bryant. All the gentlemen on the panel, almost, have 
addressed the need for a strong voice that could represent the 
industry from a Federal level.
    I have worked in Japan for many years, and I was around in 
1996 and 1998 when the USTR represented the United States in 
insurance talks with Japan. One of the things I heard from the 
regulators, Japanese regulators, the Ministry of Finance at 
that time, was that there was no one who would really speak on 
our behalf who knew what we were talking about or what they 
were talking about. Not that the USTR was an unfit negotiator, 
but they did not look at it from the perspective of the 
insurance industry. Whereas, when they were negotiating banking 
treaties, the Treasury negotiated on behalf of the U.S. banks.
    So, the FIO is very important to us as an industry. As a 
Federal representative, it is empowered to represent the 
industry and conclude treaties.
    Mr. Clay. Thank you for that.
    And along those same lines, I want to say that another 
witness mentioned the concept of a Federal advocate for 
reinsurance companies. Could someone expand on that?
    Mr. Sapnar?
    Mr. Sapnar. Yes, that was me.
    Mr. Clay. Okay.
    Mr. Sapnar. I think, for us, a lot of the international 
regulators that we deal with don't understand the U.S. 
regulatory system very well. And to have an advocate or a 
single gateway where they can go and have a single liaison with 
the different States would be useful, considering that 
different States have different regulatory regimes.
    And I would just go a step further. Last week, I think, 
David Cameron, U.K. Prime Minister, sat out in front with 
Lloyd's and talked about the importance of the Lloyd's market 
and the long-term strategy of Lloyd's. And I think having a 
Federal advocate for our business and promoting the 
transparency and the financial strength of our--and the 
successful regulatory system we do have here that isn't well 
understood would go a long ways overseas.
    Mr. Clay. And, Mr. Sapnar, you piqued my interest when you 
talked about U.S. tax structure and if it was competitive with 
the rest of the world. I was wondering, if it was competitive, 
if it was lower rates, would your company be receptive to 
repatriating your profits that you earn overseas and bringing 
them back here and paying a fair tax on those profits and 
reinvesting them in this country?
    Mr. Sapnar. Sure, I will talk about that on two levels.
    First of all, yes, we already do that as a branch system. 
So, the profits we earn overseas are consolidated under our New 
York office, and we pay full tax on that.
    Second, last year we went through a situation where we were 
being merged with another entity that was a Bermuda-based 
company. During that process, four other companies eventually 
emerged wanting to buy Transatlantic. Why did they want to buy 
Transatlantic? Because if they could get our capital and our 
assets offshore, it was a big coup for them. So, clearly, other 
people see that, and that is a potential threat to jobs here in 
the United States or Transatlantic staying on shore.
    We did ultimately choose, as a management team, to combine 
with a U.S.-based company for other reasons that were 
compelling, in my view, at the end of the day, but I had to 
answer to the shareholders.
    Mr. Clay. Okay. Thank you for that response.
    I yield back.
    Mr. Hurt. Thank you, Mr. Clay.
    Mr. Dold is recognized for 5 minutes.
    Mr. Dold. Thank you, Mr. Chairman.
    And I certainly want to thank all of our witnesses for 
being flexible today and for coming from great distances to 
join us.
    I also want to welcome all of our former committee staff 
who happen to be in the audience today. We certainly appreciate 
you being with us.
    Mr. Chairman, I was obviously on the Floor when we started 
on opening statements, and I would like to ask unanimous 
consent that my opening statement, which I was unable to give, 
be submitted for the record.
    Mr. Hurt. Without objection, it is so ordered.
    Mr. Dold. Thank you, Mr. Chairman.
    Director McRaith, it is so great to see you again. I hope 
all is going well. I thought we would just start with you.
    The other two insurance experts on the FSOC, Mr. Woodall 
and Missouri Insurance Commissioner John Huff, have both said 
that they didn't think that the traditional property casualty 
insurance could be deemed systemically significant. In fact, in 
July, Mr. Huff actually testified before this subcommittee and 
said that traditional insurance products and activities do not 
typically create systemic risk.
    As the FIO Director, the Dodd-Frank Act charges you with 
making recommendations to the FSOC on insurance companies to be 
designated for the heightened prudential standards and 
supervision by the Federal Reserve. Do you foresee the FIO 
recommending to the FSOC or any equivalent international body 
that any insurer be deemed systemically significant?
    Mr. McRaith. The Financial Stability Oversight Council, by 
statute, looks at all firms that may present a vulnerability or 
threaten the health of the economy. It does not afford the 
Council the opportunity of exempting any one industry or 
sector. In that process, I know the Council is evaluating large 
firms that have many different business components. While the 
traditional business of insurance may not, in itself, present 
systemic risk, that is not a reason not to look at a larger 
firm.
    I would not disagree with the statements that Director Huff 
and Mr. Woodall have made. I would say that I think, as a 
country, it is clear that we need to always evaluate a firm as 
a whole, ``look under the hood,'' as they say, and evaluate 
what are the nontraditional insurance aspects of that firm's 
operations.
    Mr. Dold. And I certainly believe that is fair. Are there 
any firms that you can think of right now, insurance firms, 
that you think potentially you would recommend to the FSOC as 
systemically significant?
    Mr. McRaith. No, but I would--looking at history, of 
course, we could look at AIG--
    Mr. Dold. Sure.
    Mr. McRaith. --a firm that was predominantly known as an 
insurance firm. That would be a firm, if we were to go back 
several years, we would like to be designated.
    Mr. Dold. Director McRaith, I don't disagree. My question 
to you on AIG is, property and casualty, was that part of the 
issue with AIG?
    Mr. McRaith. I don't want to comment on any firm today, 
but--
    Mr. Dold. Sure.
    Mr. McRaith. --I would say, looking back at AIG, 
historically, there were issues in some of the insurance--
    Mr. Dold. No question, there were issues.
    Mr. McRaith. Yes.
    Mr. Dold. I just think that if we look at it on the aspects 
of their business, if we have a traditional property and 
casualty insurance business, generally those weren't really the 
issues. And I understand your need to try and look under the 
hood, and I think that is certainly good. I just wanted to see 
if you had any on the top of your mind right now.
    If I can, I would just like to switch to Mr. O'Bryant. 
Thank you again for making the trek in as long as you have. The 
question I have for you is, you expressed concern in your 
written testimony about the reinsurance of certain term life 
insurance products because the United States has strict 
reserving rules for such products that are not present in many 
other countries. Further, you suggest that if the FIO does not 
address this disparity, a number of U.S. firms would be 
disadvantaged in their ability to offer competitive prices to 
reinsure such products.
    What specific recommendations, if any, would you have for 
Director McRaith, the FIO, to address this concern?
    Mr. O'Bryant. Thank you for the question.
    Again, I think the most important thing is to have a strong 
advocate that can use the U.S. model and the strength of the 
industry.
    One of the things we enjoy from the State regulators is a 
very strong and prudent model that has protected the industry 
and protected the consumers and policyholders for many years. 
And it has shown that reserving requirements here are indeed 
substantial and, because of the long-term results of reserving 
standards here, that they have applicability worldwide.
    But I think having the one voice that can advocate the same 
type of standards and same type of solvency requirements is the 
greatest strength that we could ask for.
    Mr. Dold. I certainly thank you for the comments.
    Mr. Bartlett, I had a question. My time has expired, so I 
will submit that in writing to you.
    But, again, thank you all for taking the time to join us 
today.
    Mr. Hurt. Thank you, Mr. Dold.
    Mr. Cleaver is recognized for 5 minutes.
    Mr. Cleaver. I will yield to the gentleman if he would like 
to--not completely, but--
    Mr. Dold. No, no, just for the question.
    Mr. Cleaver. Yes.
    Mr. Dold. I do appreciate that. I thank my friend for 
yielding just for the question.
    Mr. Bartlett, in your testimony, you applauded the Chinese 
Government's announcement that it would lift the prohibition on 
foreign firms offering mandatory auto insurance policies.
    Are there other restrictions that impede U.S. 
competitiveness in China that the Administration can address 
through its Strategic and Economic Dialogue?
    Mr. Bartlett. Thank you. I will be brief.
    Yes, of course, it is China, so there are a lot of 
restrictions. Auto insurance was another step forward. The two 
that come to mind is, one is that U.S. insurers need to be able 
to open branches concurrently. It would be like saying that you 
can offer a new brand of fertilizer for soybeans but only one 
field at a time per year, and that wouldn't get you very far 
very fast.
    And then second is to lift its moratorium on license 
approvals for foreign firms offering annuities and retirement 
products. That would be astoundingly positive for the Chinese 
themselves as well as for global trade.
    Mr. Dold. Thank you, sir. I appreciate it.
    And I appreciate my friend for yielding.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Let me go with Mr. O'Bryant and Mr. Bartlett, not just 
because they have a big operation in Missouri, but--I am 
wondering, Mr. O'Bryant, what specifically can the Federal 
Government do to help companies like yours? Now, the follow-up 
is dangerous, but go ahead. What can we do to help companies 
like RGA?
    Mr. O'Bryant. As we enter new markets, the greatest 
challenge that we have is local regulations. Clearly, the 
standards are different from those that we have here at home. 
And our whole entire business model is built on providing 
additional services to expand the ability of local insurers, as 
well as multinationals in those countries, to offer products to 
a greater number of people through our specialized underwriting 
capabilities as well as to inject new knowledge through product 
development ideas in those countries.
    But because of the barriers that we find, often because of 
capital that is required--and, as Mr. Sapnar said, in many 
cases, we are required to set up localized companies instead of 
being able to work through branch structures. And then also, in 
many cases, as I mentioned earlier, in Brazil, where there are 
requirements that the state-owned company receive a greater 
portion of any kind of ceded premium, it restricts our ability 
to move into those markets, and it actually helps local 
companies expand their companies.
    Mr. Cleaver. So the follow-up would be--and you may have 
answered this--what is it that we are doing presently that you 
believe to be the greatest impediment to RGA? Either you or Mr. 
Bartlett or both?
    Mr. Bartlett. What I have communicated clearly with Mr. 
McRaith and with others is that I think the greatest challenge 
and the single place that we can advance the cause of the 
American consumer the most is with uniform standards from State 
to State, to create equal protection of the laws in every 
State. The American people, both consumers and businesses, are 
highly mobile. They are interstate, they are interconnected, 
and they deserve the opportunity to have a uniform set of 
standards.
    We are a long way from that, and it can be happening in 
incremental steps, but I think that is one of the challenges 
for FIO in which they can advance the cause for the American 
people by a lot.
    Mr. Cleaver. Mr. Sapnar?
    Mr. Sapnar. Thank you.
    I think Director McRaith has a unique opportunity, 
difficult in being the first Director as well, but he has some 
abilities or authorities that the States don't have, and we 
historically haven't had in the United States, to enter into 
some agreements with foreign regulators that are binding.
    And I think that the biggest problem we face is we have 50 
different States that are hard for our overseas regulators to 
understand. And if he can get down to settlement of those 
issues, rather than discussions of principles, we think that 
would be a really good thing at the end of the day.
    That is very difficult for him. He has a lot to do, there 
is a lot going on, so he needs the support. We are prepared to 
support him and to educate the office as much as possible. I am 
not suggesting it is easy, but I think it is certainly 
possible.
    Mr. Cleaver. Thank you.
    Mr. Hurt. Thank you, Mr. Cleaver.
    Without objection, I would like to recognize myself for an 
additional 5 minutes to ask questions of Mr. Vastine and 
Professor Kochenburger.
    We have heard concern about the European Union's Solvency 
II initiative, and I would like to hear from you about whether 
or not you believe that initiative will put U.S. insurers at an 
unfair disadvantage. And how would you recommend to minimize 
that unfair advantage?
    If I could have Mr. Vastine address that question, and 
then, Mr. Kochenburger, if you could also weigh in. Thank you.
    Mr. Vastine. Solvency II is obviously an enormous concern 
to our country, and it does pose competitive issues that the 
industry is engaging in a very intense way with regulators in 
Europe and with the help of Mr. McRaith.
    So I think the response of the industry has been, in the 
context especially of the EU-U.S. High-Level Working Group, to 
more actively and thoroughly engage the Europeans in a dialogue 
that will result in a mutually recognized and mutually 
beneficial outcome, so that these two huge global markets can 
coordinate their regulation and mutually accept the 
effectiveness of each other's regulation, so that the United 
States is not faced with a set of regulations that are foreign 
to its business or strange to its business, are not endogenous, 
and we can come to an agreement.
    So we have embraced the services--the insurance sector has 
really embraced the U.S.-EU High-Level Working Group as a means 
to promote that very important dialogue with the Europeans.
    Mr. Hurt. Thank you, Mr. Vastine.
    Mr. Kochenburger?
    Mr. Kochenburger. Thank you.
    I think a couple of years ago--just one quick point to 
add--a couple of years ago, Director McRaith, when he was 
commissioner in Illinois, testified before Congress on behalf 
of the NAIC on Solvency II. And I think the term he used, which 
is one I like, is that it is not a cure-all, it is not a 
panacea, and it is not necessarily the model for the world.
    And I think part of the concern would be that the United 
States solvency models have actually worked fairly--well, very 
effectively, and, also, that some of those models in the United 
States respond to very different situations that we have in the 
EU or elsewhere in the world, particularly in property 
casualty, where in property there may be a lot of similarities, 
but of course liability models in the United States are far 
different. Briefly put, you can be sued about many more things 
in the United States than in other countries and often for a 
long time. So, property casualty companies in the United States 
have had to be very concerned about not only asbestos claims, 
clerical abuse claims, and others that go back 20, 30, 40, or 
50 years, but what will be the next level of asbestos claims.
    Again, this responds to our own unique liability system. 
And that means that Solvency II and other models, whatever 
their merits, may, in fact, not necessarily be the best ones 
for here. And so, that is a concern I share.
    Also, however, the importance of equivalence, of course, 
can't be overstated. Our companies absolutely--and they can say 
it much better than I can, and they have said it today--need 
the ability to be deemed equivalent in order to work within 
their second significant largest insurance market in the world.
    Mr. Hurt. Thank you, Mr. Kochenburger.
    Mr. McRaith, would you like to respond?
    Mr. McRaith. The EU's Solvency II framework is a well-
conceived framework adopted by some very smart insurance people 
who reside and operate and have worked in the EU. And we 
congratulate them on that initiative and on the development and 
progress they have made.
    The purpose of the EU-U.S. insurance dialogue which I 
described earlier is to alleviate the concern, resolve the 
uncertainty for the insurance sector based in both 
jurisdictions, so that companies, whether based in Europe or 
the United States, can compete, as needed, in emerging 
economies around the world.
    Whether this results in something called an equivalence 
assessment by the EU, we can't be sure. What I can tell you is 
that the United States, through the dialogue or the insurance 
project that is now being undertaken, will conclude this year 
with a path forward. And we will, in fact, embrace best 
practices, if there are best practices to be embraced. If not, 
we are going to move forward, hopefully arm-in-arm with our 
colleagues from overseas.
    Mr. Hurt. Thank you.
    Mr. McCarty, we are over time, but would you like to 
respond briefly?
    Mr. McCarty. Yes, I concur with Director McRaith that we 
certainly commend our colleagues overseas for the great work 
they did to modernize their solvency system; that we are 
participating with the Director on the steering committee to 
look at--and I think it is absolutely essential that we have a 
mutual recognition in order to preserve transatlantic commerce 
and provide better choices and stability for our consumers.
    Mr. Hurt. Excellent. Thank you.
    I want to thank each of you for joining us today and for 
providing your insight and comments to our committee.
    I ask unanimous consent to insert the following material 
into the record: a May 17, 2012, statement from the American 
Insurance Association; a May 17, 2012, statement from the 
Council of Insurance Agents and Brokers; a May 17, 2012, 
statement from Property Casualty Insurers Association of 
America; a May 17, 2012, statement from the National 
Association of Mutual Insurance Companies; and a 2009 U.S. 
International Trade Commission report entitled, ``Property and 
Casualty Insurance Services: Competitive Conditions in Foreign 
Markets.'' Without objection, those documents will be admitted 
into the record.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for Members to submit written questions to these 
witnesses and to place their responses in the record.
    With that, once again, I thank the members of the 
committee, and I thank the members of the panel for joining us. 
And this hearing is adjourned.
    [Whereupon, at 4:10 p.m., the hearing was adjourned.]










                            A P P E N D I X



                              May 17, 2012






