[Federal Register Volume 77, Number 83 (Monday, April 30, 2012)]
[Rules and Regulations]
[Pages 25349-25353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10146]



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 Rules and Regulations
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  Federal Register / Vol. 77, No. 83 / Monday, April 30, 2012 / Rules 
and Regulations  

[[Page 25349]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 380

RIN 3064-AD89


Mutual Insurance Holding Company Treated as Insurance Company

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is issuing a final rule (``Final Rule'') that treats 
a mutual insurance holding company as an insurance company for purposes 
of Section 203(e) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (the ``Dodd-Frank Act''). The Final Rule clarifies that 
the liquidation and rehabilitation of a covered financial company that 
is a mutual insurance holding company will be conducted in the same 
manner as an insurance company. The Final Rule harmonizes the treatment 
of mutual insurance holding companies under Section 203(e) of the Dodd-
Frank Act with the treatment of such companies under state insurance 
company insolvency laws.

DATES: The effective date of the Final Rule is May 30, 2012.

FOR FURTHER INFORMATION CONTACT:  R. Penfield Starke, Assistant General 
Counsel, Legal Division, (703) 562-2422; Mark A. Thompson, Counsel 
(703) 562-2529; Elizabeth Falloon, Counsel (703) 562-6148; Timothy F. 
Danello, Counsel (703) 562-6338, Legal Division; or Hashim Hamandi, 
Section Chief Policy Section, Office of Complex Financial Institutions, 
(202) 898-6884.

SUPPLEMENTARY INFORMATION: 

I. Background

    Title II of the Dodd-Frank Act provides for the appointment of the 
FDIC as receiver of a nonviable financial company that poses 
significant risk to the financial stability of the United States (a 
``covered financial company''), outlines the process for the orderly 
liquidation of a covered financial company following the FDIC's 
appointment as receiver and provides for additional implementation of 
the orderly liquidation authority by rulemaking. The Final Rule is 
promulgated pursuant to Section 209 \1\ of the Dodd-Frank Act, which 
authorizes the FDIC, in consultation with the Financial Stability 
Oversight Council, to prescribe such rules and regulations as the FDIC 
considers necessary or appropriate to implement Title II. Section 209 
of the Dodd-Frank Act further provides that, to the extent possible, 
the FDIC should seek to harmonize rules and regulations promulgated 
under Section 209 with the insolvency laws that would otherwise apply 
to a covered financial company.
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    \1\ 12 U.S.C. 5389.
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    On December 13, 2011, the FDIC published a Notice of Proposed 
Rulemaking (``NPR'') in the Federal Register \2\ setting forth the 
conditions under which a mutual insurance holding company would be 
resolved as an insurance company under Section 203(e) of the Dodd-Frank 
Act. The comment period for the NPR closed on February 13, 2012, and 
the FDIC received four comment letters. Additionally, the FDIC held a 
conference call with representatives of the National Association of 
Insurance Commissioners on January 17, 2012 and received their comments 
on the NPR.
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    \2\ 76 FR 77442 (December 13, 2011).
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    In light of the comments received and pursuant to the authority 
granted to it by Section 209 of the Dodd-Frank Act, the FDIC is issuing 
the Final Rule.

History of Mutual Insurance Holding Company

    The mutual insurance industry traces its roots back to England, 
where, in 1696, the first mutual fire insurer was established. The 
first American mutual insurance company, the Philadelphia 
Contributionship for the Insurance of Houses from Loss by Fire, was 
founded in 1752.\3\
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    \3\ The Philadelphia Contributionship, History, http://www.contributionship.com/history/index.html.
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    Mutual insurance companies have no equity interests. Membership 
rights are held by their policyholders. Policyholders are entitled to 
vote for members of the company's board of directors and may receive 
special dividends in the form of capital distributions or reductions of 
policy premiums.
    The mutual insurance holding company structure was first created in 
Iowa in 1995.\4\ A mutual insurance holding company is created through 
the restructuring of a mutual insurance company into two entities, a 
mutual insurance holding company and a stock insurance company that is 
converted from the original mutual insurance company. In a variation of 
this restructuring, a third entity may be formed, an intermediate 
insurance stock holding company. In this three-entity structure, in 
most instances, the mutual insurance holding company initially owns 
100% of the intermediate insurance stock holding company, and the 
intermediate insurance stock holding company initially owns 100% of the 
stock of the converted mutual insurance company. The purpose of the 
restructuring is to preserve the benefits of a mutual form of 
organization while allowing the converted mutual insurance company 
access to capital markets either through sale of its stock or, in a 
three-entity structure, the sale of the stock of the intermediate 
insurance stock holding company.
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    \4\ Iowa Code Ann. (West) Sec.  521A.14.
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    Consistent with the mutual insurance company, a mutual insurance 
holding company also has no equity interests. Membership rights are 
held by the policyholders of the converted mutual insurance company who 
have rights similar to those they had as policyholders of the mutual 
insurance company before conversion. Policyholders of the converted 
mutual insurance company are entitled to vote for members of the mutual 
insurance holding company's board of directors, and may receive special 
dividends in the form of capital distributions or reductions of policy 
premiums.
    A majority of the states have adopted statutes providing for the 
formation of mutual insurance holding companies. Those statutes 
generally (a) provide for the regulation of a mutual insurance holding 
company at the holding company level by the insurance commissioner of 
the domiciliary state; (b) require that the mutual insurance

[[Page 25350]]

holding company maintain voting control over the converted mutual 
insurance company; and (c) specifically subject a mutual insurance 
holding company to liquidation or rehabilitation under the state regime 
if the converted mutual insurance company is placed in liquidation or 
rehabilitation. In addition, either by statute, rule or regulation, in 
the liquidation of a converted mutual insurance company, the assets of 
the mutual insurance holding company generally are included in the 
estate of the converted mutual insurance company being liquidated.\5\
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    \5\ E.g., Iowa Code Ann. (West) 521A.14(4), 215 Ill. Comp. Stat. 
Ann. (West) 5/59.2(1)(f)(v), and Neb. Rev. Stat. Sec.  44-
6125(6)(g).
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Treatment of an Insurance Company Under Section 203(e) of the Dodd-
Frank Act

    In providing for the orderly liquidation of a covered financial 
company under Title II of the Dodd-Frank Act, Congress recognized that 
insurance companies historically had been liquidated and rehabilitated 
pursuant to a state insolvency framework. As a result, Congress 
provided that ``if an insurance company is a covered financial company 
or a subsidiary or affiliate of a covered financial company, the 
liquidation or rehabilitation of such insurance company, and any 
subsidiary or affiliate of such company that is [an insurance company], 
shall be conducted as provided under applicable State law.'' \6\
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    \6\ 12 U.S.C. 5383(e)(1).
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    The term ``insurance company'' is defined in Section 201(a)(13) of 
the Dodd-Frank Act to mean ``any entity that is--(A) engaged in the 
business of insurance; (B) subject to regulation by a State insurance 
regulator; and (C) covered by a State law that is designed to 
specifically deal with the rehabilitation, liquidation, or insolvency 
of an insurance company.'' \7\ The identical definition is found in 
Section 380.1 of Title 12 of the Code of Federal Regulations. Concerns 
have been raised with respect to the application of this definition to 
mutual insurance holding companies because, under applicable state 
laws, a mutual insurance holding company generally is prohibited from 
selling policies of insurance. Thus, a mutual insurance holding company 
arguably does not fit squarely within a literal reading of the 
statutory definition of insurance company under the Dodd-Frank Act.
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    \7\ 12 U.S.C. 5381(a)(13).
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    The treatment of a mutual insurance holding company, under certain 
circumstances, as an insurance company for purposes of Section 203(e) 
is consistent with the legislative intent of the Dodd-Frank Act.\8\ 
This treatment is appropriate given the legal structure that forms a 
mutual insurance holding company from a converted mutual insurance 
company and the continuing interest of the policyholders of the 
converted mutual insurance company in both the converted mutual 
insurance company, as its customers, and the mutual insurance holding 
company, as holders of its membership interests. From a regulatory 
policy perspective, the extensive regulation of the mutual insurance 
holding company by the insurance commissioner of its domiciliary state 
and the inclusion of the mutual insurance holding company and its 
assets in the liquidation of the converted mutual insurance company 
also support this treatment.
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    \8\ There is support in the legislative history of the Dodd-
Frank Act for interpreting the term ``insurance company'' under 
Section 201(a)(13) to include a mutual insurance holding company. 
See statement of Rep. Barney Frank, 111 Cong. Rec. H5216 (daily ed. 
June 30, 2010) and statement of Sen. Christopher Dodd, 111 Cong. 
Rec. S5903 (daily ed. July 15, 2010).
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II. Notice of Proposed Rulemaking: Summary of Comments

    On December 13, 2011, the FDIC invited public comment on a Notice 
of Proposed Rulemaking: Mutual Insurance Holding Company Treated as 
Insurance Company (the ``Proposed Rule'').\9\ The comment period ended 
on February 13, 2012. The FDIC received four comment letters from 
several industry and trade organizations representing the insurance 
industry and one individual. In addition, the FDIC met with 
representatives of the National Association of Insurance Commissioners 
to discuss the Proposed Rule.
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    \9\ 76 FR 77442 (December 13, 2011).
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    The Proposed Rule clarified that a mutual insurance holding company 
would be treated in the same manner applicable to insurance companies 
under Section 203(e) of the Dodd-Frank Act, which provides that ``if an 
insurance company is a covered financial company or a subsidiary or 
affiliate of a covered financial company, the liquidation or 
rehabilitation of such insurance company, and any subsidiary or 
affiliate of such company that is [an insurance company], shall be 
conducted as provided under applicable State law.'' \10\ This proposed 
treatment was limited to mutual insurance holding companies whose 
largest United States subsidiary (as measured by total assets as of the 
end of the previous calendar quarter) is an insurance company or an 
intermediate insurance stock holding company, and whose investments are 
limited to the securities of an intermediate insurance stock holding 
company, the securities of the converted mutual insurance company and 
other assets and securities of the type authorized for holding and 
investment by an insurance company domiciled in its state of 
incorporation. The Proposed Rule also provided that this treatment 
apply only to mutual insurance holding companies that are regulated by 
and are subject to the insurance company insolvency laws of their 
states of domicile, and that are not subject to bankruptcy proceedings.
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    \10\ 12 U.S.C. 5383(e)(1).
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    The public comments supported the Proposed Rule's objective of 
treating a mutual insurance holding company as an insurance company for 
purposes of Section 203(e) of the Dodd-Frank Act.\11\ The comments 
focused on two elements of the Proposed Rule: The definitions of mutual 
insurance holding company and intermediate insurance stock holding 
company and the conditions imposed in order for a mutual insurance 
holding company to qualify as an insurance company under Section 203(e) 
of the Dodd-Frank Act.
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    \11\ 12 U.S.C. 5383(e).
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    Most of the commenters suggested that the definition of mutual 
insurance holding company be modified with respect to the requirement 
that the mutual insurance holding company ``hold either (i) At least 
51% of the issued and outstanding voting stock of the intermediate 
insurance stock holding company, if any, or (ii) if there is no 
intermediate insurance stock holding company, at least 51% of the 
issued and outstanding voting stock of the converted mutual insurance 
company.'' Several commenters noted that many state laws only require 
the mutual insurance holding company to own a majority of the voting 
stock of the intermediate insurance stock holding company, if any, or, 
if there is no intermediate insurance stock holding company, a majority 
of the voting stock of the converted mutual insurance company. One 
commenter recommended substituting ``a majority of the voting stock'' 
for ``51% of the issued and outstanding voting stock'' where the phrase 
appears within the definition of mutual insurance holding company. 
Another commenter recommended substituting ``a majority of the voting 
power in the election of directors'' for ``51% of the issued and 
outstanding voting stock'' where the phrase appears within the 
definition of mutual insurance holding company.

[[Page 25351]]

    Several commenters suggested that the definition of intermediate 
insurance stock holding company be modified with respect to the 
requirement that the intermediate insurance stock holding company 
``hold all of the issued and outstanding voting stock of the converted 
mutual insurance company.'' One commenter suggested that the word 
``all'' be changed to ``a majority'' to be more consistent with the 
requirements of state law. Another commenter suggested retaining the 
concept of ``all of the issued and outstanding voting stock'' but allow 
the ownership to be ``directly or indirectly.''
    One commenter suggested that the definition of intermediate 
insurance stock holding company be modified to clarify that an 
intermediate insurance stock holding company can be formed either at 
the time of or at any time after the conversion of the mutual insurance 
company into a stock insurance company. Another commenter suggested 
deleting the phrase ``For purposes of this subpart'' from the 
definition of intermediate insurance stock holding company to be 
consistent with other definitions in Sec.  380.1.
    Several commenters suggested that the definition of mutual 
insurance company be modified. One commenter suggested that the word 
``association'' should be changed to ``corporation'' because a mutual 
insurance company is a non-stock corporation and not an association. 
The same commenter suggested changing the words ``in which equity and 
voting rights are vested in the policyholders'' to ``in which rights in 
surplus and membership interests are vested in the policyholders'' 
because a mutual insurance company has ``surplus'' not ``equity'' and 
the interests of the members may be broader than just voting rights. 
Another commenter suggested changing the words ``in which equity and 
voting rights are vested in the policyholders'' to ``in which equity, 
voting rights and control are vested in the policyholders'' to 
emphasize that ``policyholders actually exercise effective control, 
rather than have that power merely conferred by charter or otherwise.'' 
One commenter suggested deleting the word ``domestic'' in the phrase 
``a domestic insurance company organized under the laws of a State'' 
because it was redundant.
    With respect to the conditions that must exist for a mutual 
insurance holding company to be treated as an insurance company for the 
purpose of Section 203(e) of the Dodd-Frank Act as set forth in Sec.  
380.11, several commenters suggested modifying one or more of the 
conditions. One commenter suggested removing the condition that the 
company is not subject to bankruptcy proceedings under Title 11 of the 
United States Code, i.e., the U.S. Bankruptcy Code. The commenter noted 
that the issue of whether a mutual insurance holding company is 
excluded from coverage under the U.S. Bankruptcy Code is unsettled. 
Thus, in the commenter's view, imposing the condition in Sec.  380.11 
introduced uncertainty about whether a mutual insurance holding company 
would be treated as an insurance company for the purpose of Section 
203(e) of the Dodd-Frank Act.
    Several commenters suggested modifying the requirement in Sec.  
380.11 that the mutual insurance holding company limit its assets and 
investments to the securities of an intermediate insurance stock 
holding company, the securities of the converted mutual insurance 
company ``and other assets and securities of the type authorized for 
holding and investment by an insurance company domiciled in its state 
of incorporation.'' The commenters noted that the requirement is not 
mandated by state law although some states do limit a mutual insurance 
holding company's investment in non-insurance assets. One of those 
commenters suggested that the mutual insurance holding company be 
allowed to make any investment ``permitted under applicable State 
law.''
    The FDIC has carefully considered the comments and made appropriate 
revisions to the Final Rule as described below.

III. Description of Final Rule

A. Overview

    The Final Rule modifies Part 380 of Title 12 of the Code of Federal 
Regulations, and provides generally that a mutual insurance holding 
company that meets the requirements of the Final Rule will be treated 
as an insurance company for the purpose of Section 203(e) of the Dodd-
Frank Act.

B. Section-by-Section Analysis of the Final Rule

    The Final Rule adds three definitions to Section 380.1 of Title 12 
of the Code of Federal Regulations: Intermediate insurance stock 
holding company; mutual insurance company; and mutual insurance holding 
company. The definition of mutual insurance holding company has been 
modified in the Final Rule to provide that the company could own a 
``majority'' of the stock of the intermediate insurance stock holding 
company and the converted mutual insurance company instead of the 
specific threshold of ``at least 51%'' included in the Proposed Rule. 
The definition of the intermediate insurance stock holding company was 
also modified in the Final Rule to delete an unnecessary introductory 
phrase ``For purposes of this subpart'' and to indicate that such 
company could be organized either at the time of or after the 
organization of the mutual insurance holding company and could hold ``a 
majority'' rather than ``all'' of the stock of the converted mutual 
insurance company. In addition, the definition of the mutual insurance 
company was amended to reflect that it is organized as a non-stock 
mutual corporation, not an association, and that its policyholders hold 
the surplus, not ``equity'' in this company. The Final Rule does not 
include any additional changes suggested by the public comments to 
permit the mutual insurance holding company to hold the voting stock of 
the intermediate insurance stock holding company directly or indirectly 
or to permit the intermediate insurance stock holding company to hold 
the voting stock of the converted mutual insurance company directly or 
indirectly. These changes appear inconsistent with the existing mutual 
insurance holding company structure. Likewise, the Final Rule does not 
remove the term ``voting rights'' and substitute the term ``membership 
interests'' since voting rights remain essential to defining the 
control of the mutual insurance company and the intermediate insurance 
stock holding company.
    The Final Rule adds Section 380.11 to provide that a mutual 
insurance holding company shall be treated as an insurance company for 
the purpose of Section 203(e) of the Dodd-Frank Act, 12 U.S.C. 5383(e); 
provided that: (a) It is subject to the insurance laws of the state of 
its domicile, including specifically and without limitation, a 
statutory regime for the rehabilitation or liquidation of insurance 
companies that are in default or in danger of default; (b) it is not 
subject to bankruptcy proceedings under Title 11 of the United States 
Code; (c) its largest United States subsidiary (as measured by total 
assets as of the end of the previous calendar quarter) is an insurance 
company or an intermediate insurance stock holding company; and (d) its 
investments are limited to the securities of an intermediate insurance 
stock holding company, the securities of the converted mutual insurance 
company and other assets and securities of the type authorized for 
holding and investment by an insurance company domiciled in its state 
of incorporation.

[[Page 25352]]

    The first proviso requires that the mutual insurance holding 
company be subject to the insurance laws of the state of its domicile, 
including specifically and without limitation, a statutory regime for 
the rehabilitation or liquidation of insurance companies that are in 
default or in danger of default and is included in the Final Rule to be 
consistent with two of the three prongs of the definition of 
``insurance company'' set forth in Section 201(a)(13) of the Dodd-Frank 
Act. The reference to companies that are ``in default or in danger of 
default'' ensures that the state resolution process will be applicable 
in a time and manner comparable to the Title II orderly liquidation 
process, which applies to financial companies that are in default or in 
danger of default under Section 203(b)(1) of the Dodd-Frank Act.
    The second proviso requires that the mutual insurance holding 
company is not subject to bankruptcy proceedings under Title 11 of the 
United States Code and is included to make clear that the mutual 
insurance holding company must not only be subject to the applicable 
state insurance law but must also be resolved under the applicable 
state insurance law. Thus, the Final Rule does not delete this 
requirement as some public comments suggested, but rather retains it to 
ensure that there is no ambiguity or conflict with respect to the 
determination of which insolvency regime is applicable to a mutual 
insurance holding company. To the extent that any such ambiguity or 
conflict exists, it is the intent of the Final Rule that the ambiguity 
be resolved in favor of allowing resolution under Title II of the Dodd-
Frank Act even if the mutual insurance holding company may be an 
eligible debtor under Title 11 of the United States Code.
    The third proviso, which requires that the mutual insurance holding 
company's largest United States subsidiary (as measured by total assets 
as of the end of the previous calendar quarter) is an insurance company 
or an intermediate insurance stock holding company, is included to 
ensure that, if a mutual insurance holding company covered by the Final 
Rule is placed in orderly liquidation under Title II of the Dodd-Frank 
Act, the Director of the Federal Insurance Office would participate in 
making the recommendation to take such action in accordance with the 
provisions of Section 203(a)(1)(C) of the Dodd-Frank Act. In addition, 
this requirement is intended to make clear that an insurance company 
subsidiary of the mutual insurance holding company must be its most 
significant subsidiary by asset size.
    The final proviso requires the mutual insurance holding company to 
limit its investments to the securities of the intermediate insurance 
stock holding company, the securities of the converted mutual insurance 
company and other assets and securities of the type authorized for 
holding and investment by an insurance company domiciled in its state 
of incorporation. The FDIC rejected a public comment to alter these 
investment requirements because the FDIC believes that this proviso 
ensures that the mutual insurance holding company is operating purely 
as a holding company and is not itself actively engaged in operating 
non-insurance businesses.\12\
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    \12\ The investments of the intermediate insurance stock holding 
company, however, are not restricted in this manner because, under 
the Final Rule, the intermediate insurance stock holding company is 
not treated as an insurance company for the purpose of Section 
203(e) of the Dodd-Frank Act.
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IV. Regulatory Analysis and Procedure

A. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.) (``PRA''), the FDIC may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. The Final Rule would not involve any new collections of 
information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.). Consequently, no information will be submitted to the Office of 
Management and Budget for review.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act 5 U.S.C. 601 et seq. (RFA) requires 
each federal agency to prepare a final regulatory flexibility analysis 
in connection with the promulgation of a final rule, or certify that 
the final rule will not have a significant economic impact on a 
substantial number of small entities.\13\ Pursuant to Section 605(b) of 
the Regulatory Flexibility Act, the FDIC certifies that the Final Rule 
will not have a significant economic impact on a substantial number of 
small entities.
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    \13\ See 5 U.S.C. 603, 604 and 605.
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    Under regulations issued by the Small Business Administration 
(``SBA''), a ``small entity'' includes those firms within the ``Finance 
and Insurance'' sector with asset sizes that vary from $7 million or 
less in assets to $175 million or less in assets.\14\ The Final Rule 
clarifies that a mutual insurance holding company that is a covered 
financial company will be treated as an insurance company for the 
purpose of Section 203(e) of the Dodd-Frank Act. The Final Rule 
provides internal guidance to FDIC personnel in such an event and will 
address an uncertainty in the financial system as to how such a company 
would be treated for purposes of Section 203(e) of the Dodd-Frank Act. 
For a mutual insurance holding company to be determined to be a covered 
financial company under Section 203(b) of the Dodd-Frank Act, its 
failure must have serious adverse effects on the financial stability of 
the United States. The Final Rule would apply to a mutual insurance 
holding company regardless of such company's size. Although the asset 
size of a company may not be the determinative factor of whether such 
company may pose a systemic risk to the financial stability of the 
United States, it is an important consideration. It is unlikely that 
the failure of a mutual insurance holding company that is at or below 
the $175 million asset threshold, or the nature, scope, size, scale, 
concentration, interconnectedness, or mix of its activities, would pose 
a threat to the financial stability of the United States. As such, the 
Final Rule will not have a significant economic impact on small 
entities.
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    \14\ 13 CFR 121.201.
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C. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget has determined that the Final 
Rule is not a ``major rule'' within the meaning of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (``SBREFA'') (5 U.S.C. 801 
et seq.). As required by SBREFA, the FDIC will file the appropriate 
reports with Congress and the General Accounting Office so that the 
Final Rule may be reviewed.

D. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The FDIC has determined that the Final Rule will not affect family 
well-being within the meaning of Section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 
(Pub. L. 105-277, 112 Stat. 2681).

E. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 
Stat. 1338, 1471), requires the Federal banking agencies to use plain 
language in all proposed and final rules published after January 1, 
2000. The

[[Page 25353]]

FDIC has sought to present the Final Rule in a simple and 
straightforward manner.

List of Subjects in 12 CFR Part 380

    Holding companies, Insurance companies, Mutual insurance holding 
companies.

    For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation amends part 380 of title 12 of the Code 
of Federal Regulations as follows:

PART 380--ORDERLY LIQUIDATION AUTHORITY

0
1. The authority citation for part 380 is revised to read as follows:

    Authority: 12 U.S.C. 5383(e); 12 U.S.C. 5389; 12 U.S.C. 
5390(s)(3); 12 U.S.C. 5390(b)(1)(C); 12 U.S.C. 5390(a)(7)(D).



0
2. The heading for subpart A is revised to read as follows:

Subpart A--General and Miscellaneous Provisions

0
3. Amend Sec.  380.1 by adding definitions of Intermediate insurance 
stock holding company, Mutual insurance company, and Mutual insurance 
holding company in alphabetical order to read as follows:


Sec.  380.1  Definitions.

* * * * *
    Intermediate insurance stock holding company. The term 
``intermediate insurance stock holding company'' means a corporation 
organized either at the time of, or at any time after, the organization 
of the mutual insurance holding company that:
    (1) Is a subsidiary of a mutual insurance holding company;
    (2) Holds a majority of the issued and outstanding voting stock of 
the converted mutual insurance company created at the time of formation 
of the mutual insurance holding company; and
    (3) Holds, as its largest United States subsidiary (as measured by 
total assets as of the end of the previous calendar quarter), an 
insurance company.
    Mutual insurance company. The term ``mutual insurance company'' 
means an insurance company organized under the laws of a State that 
provides for the formation of such an entity as a non-stock mutual 
corporation in which the surplus and voting rights are vested in the 
policyholders.
    Mutual insurance holding company. The term ``mutual insurance 
holding company'' means a corporation that:
    (1) Is lawfully organized under state law authorizing its formation 
in connection with the reorganization of a mutual insurance company 
that converts the mutual insurance company to a stock insurance 
company, and--
    (2) Holds either:
    (i) A majority of the issued and outstanding voting stock of the 
intermediate insurance stock holding company, if any, or
    (ii) If there is no intermediate insurance stock holding company, a 
majority of the issued and outstanding voting stock of the converted 
mutual insurance company.
* * * * *

0
4. Add Sec.  380.11 to read as follows:


Sec.  380.11  Treatment of mutual insurance holding companies.

    A mutual insurance holding company shall be treated as an insurance 
company for the purpose of section 203(e) of the Dodd-Frank Act, 12 
U.S.C. 5383(e); provided that--
    (a) The company is subject to the insurance laws of the state of 
its domicile, including, specifically and without limitation, a 
statutory regime for the rehabilitation or liquidation of insurance 
companies that are in default or in danger of default;
    (b) The company is not subject to bankruptcy proceedings under 
Title 11 of the United States Code;
    (c) The largest United States subsidiary of the company (as 
measured by total assets as of the end of the previous calendar 
quarter) is an insurance company or an intermediate insurance stock 
holding company; and
    (d) The assets and investments of the company are limited to the 
securities of an intermediate insurance stock holding company, the 
securities of the converted mutual insurance company and other assets 
and securities of the type authorized for holding and investment by an 
insurance company domiciled in its state of incorporation.

    Dated at Washington, DC, this 23rd day of April 2012.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2012-10146 Filed 4-27-12; 8:45 am]
BILLING CODE 6714-01-P