AIG to restructure as feds mull looser oversight

Financial services giant AIG will restructure its business and reincorporate its consumer and commercial divisions as it attempts to shed stricter federal oversight.

AIG will divide its operations into general insurance, life and retirement planning and a tech platform while shifting the two major finance units, the company announced Monday.

The general insurance division will include commercial, personal insurance, and U.S. and international field operations, while life and retirement side will include group retirement plans, individual retirement plans, life insurance, and institutional markets.

The company expects to update its financial reporting and disclosures following the changes, which come amid AIG’s push to lose the “systemically important financial institution” (SIFI) label that was largely inspired the company.

SIFIs are subjected to stricter federal oversight and capital requirements through the Dodd-Frank Act, the sweeping banking laws passed after the financial crisis. AIG’s near-bankruptcy following the panic was one of several factors that prompted lawmakers to ramp up oversight of major banks and financial firms.

Any bank with more than $50 billion in assets is automatically considered a SIFI, and the interagency Financial Stability Oversight Council (FSOC) can label non-banks as SIFIs.

FSOC has been considering lifting AIG’s SIFI label over the past year, and met Friday to consider the status of a non-banks SIFI widely expected to be AIG. FSOC didn’t announce any changes to SIFI statuses following the meeting, though the company’s new structure could prompt changes in members’ opinions.

AIG and Prudential are the only current non-bank SIFIs, after a federal court struck down Metlife’s SIFI designation in 2016. The Obama Administration appealed that decision last year, which pending before a federal court of appeals.

Republican lawmakers and banking trade groups have long targeted the SIFI label for changes, calling the $50 billion threshold arbitrary. A massive House-passed bill to undo much of Dodd-Frank included a measure to replace the $50-billion redline with a risk analysis, and some Democrats have expressed openness to adjusting the threshold.

Updated on September 26 at 1:52 p.m.