US regulators cancel federal supervision of Prudential Financial

This decision did not leave any non-banking company with the "systemic" label, which shows that the Trump administration does not see the need to strengthen the regulation of large companies outside the banking sector.

This means that the insurer and asset manager based in New Jersey, New Jersey, will potentially save tens of millions of dollars in regulatory costs. Fed examiners, who have been in Prudential's office since being appointed in 2013, are likely to leave the premises immediately, leaving New Jersey supervisors with primary responsibility for overseeing the company's global operations.

"Today's decision is a result of a close relationship with the company and a detailed analysis showing that there is no significant risk that the company poses a threat to financial stability," he said. US Treasury Secretary Steven Mnuchin on Wednesday.

Prudential said it was "pleased with this decision, which confirms our longstanding belief that Prudential has never met the designation standard."

The supervisory board was created by the Dodd-Frank Act to prevent the global financial crisis of 2008 from repeating itself when taxpayers bailed out large companies outside the banking sector. It empowered regulators to impose stricter rules on non-bank companies, including insurers that were historically regulated.

Regulators under the Obama administration have applied the systemic label to four non-bank companies …

American international group
Inc.

General Electric
Co.

the GE Capital finance arm,

MetLife
Inc.

and Prudential.

The government removed the federal oversight of AIG and GE Capital after the companies had made significant changes to their business model.

MetLife persuaded a federal judge to reverse her appointment in 2016, but she also made some changes: she gave up about a fifth of her business through a split of what became

Brighthouse Financial
Inc.

citing both strategic and regulatory reasons. The split contains products, such as life income guarantees, that should be subject to the strictest capital requirements imposed by the federal government.

Prudential outperforms 2013. When insurers are classified according to their assets, the agreement includes only those that belong to them, not money managed for clients. At June 30, Prudential's total assets were $ 819.86 billion, compared to $ 706.33 billion for MetLife and $ 496.83 billion for AIG.

Prudential's market capitalization currently stands at around $ 41 billion, just under $ 44 billion each for AIG and MetLife.

After being designated for stricter oversight in 2013, Prudential felt it could manage additional regulation by consolidating the activities it had created over the past two decades.

The diversity of Prudential means that the Fed's regulation may have been cheaper for it than some of its peers. Some of its activities, such as asset management, would have had less impact than other activities, such as the sale of retirement income annuities with life income guarantees.

The new capital regulation that could have hurt this business has been reviewed by the Fed but has never been completed.

In its call to regulators, Prudential had planned to repeat earlier arguments that it was not a major threat to financial stability, said people familiar with his thinking.

Write to Ryan Tracy at [email protected], Leslie Scism at [email protected] and Allison Prang at [email protected]