"As such, the question becomes whether naming certain insurers as G-SIIs enhances financial stability and warrants the resulting costs to insurers and their regulators", said the ratings agency in its "If insurers do not pose a systemic risk, do the G-SII designation's costs outweigh its benefits?" publication.
Being designated a G-SII brings additional supervisory oversight and potentially higher capital requirements. Supervisory measures consist of three main areas - enhanced supervision, effective resolution and higher loss absorption capacity, the International Association of Insurance Supervisors (IAIS) has explained.
But S&P said this week that the merits of the global systemically important insurer (G-SII) designation for global financial stability are not clear.
"Some of the proposals are worthy, in our view, but some may be unnecessary", said S&P. It added that some of the consequences of being a G-SII are still to emerge. S&P views the global capital standard, a requirement for the G-SII regime, as a positive development for the industry as a whole, but believes the timetable for implementation is 'aggressive'.
No S&P rating actions have resulted from the G-SII designation thus far, but it sees potential for both positive and negative longer-term rating implications for G-SIIs.
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