FRQ1_20240115_omb

Supporting Statement for the
Capital Requirements for Board-Regulated Institutions
Significantly Engaged in Insurance Activities
(FR Q-1; OMB No. 7100-NEW)
Regulatory Capital Rules: Risk-Based Capital Requirements for
Depository Institution Holding Companies Significantly Engaged in Insurance Activities
(Docket No. R-1673) (RIN 7100-AF56)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated from the Office of Management and Budget (OMB), has implemented for three years
the Capital Requirements for Board-Regulated Institutions Significantly Engaged in Insurance
Activities (FR Q-1; OMB No. 7100-NEW). The Board adopted a final rule1 that established
minimum risk-based capital requirements for certain depository institution holding companies
significantly engaged in insurance activities (insurance depository institution holding
companies). The final rule established an enterprise-wide risk-based capital framework, termed
the Building Block Approach (BBA), that incorporates legal entity capital requirements such as
the requirements prescribed by state insurance regulators, taking into account differences
between the business of insurance and banking. The final rule also contains a risk-based capital
requirement, in compliance with section 171 of The Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act).2 The Board also adopted the reporting form FR Q-1
in order to collect information related to the BBA. The capital requirements and associated
reporting form meet statutory mandates and will help to prevent the economic and consumer
impacts resulting from the failure of organizations engaged in banking and insurance. The
FR Q-1 is effective January 1, 2024, with the first as of date being December 31, 2024.
The estimated total annual burden for the FR Q-1 is 1,097 hours. The forms and
instructions are available on the Board’s public website at
https://www.federalreserve.gov/apps/reportingforms/review.
Background and Justification
In response to the 2007-2009 financial crisis, Congress enacted the Dodd-Frank Act,
which, among other purposes, was enacted to ensure appropriate supervision of depository
institution holding companies without regard to charter type of their insured depository
institution subsidiaries and to streamline the supervision of such holding companies. In
furtherance of these purposes, Title III of the Dodd-Frank Act expanded the Board’s supervisory
role by transferring to the Board all supervisory functions related to savings and loan holding
companies (SLHCs) and their non-depository subsidiaries. As a result, the Board became the
federal supervisory authority for all depository institution holding companies, including
insurance depository institution holding companies. Concurrent with the expansion of the
Board’s supervisory role, section 616 of the Dodd-Frank Act amended Home Owners’ Loan Act
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88 FR 82950 (November 27, 2023).
Public Law 111-203, 124 Stat. 1376 (2010).

(HOLA) to provide the Board express authority to adopt regulations or orders that set capital
requirements for SLHCs.
Any capital requirements the Board may establish for SLHCs are subject to minimum
standards under the Dodd-Frank Act. Specifically, section 171 of the Dodd-Frank Act requires
the Board to establish minimum risk-based and leverage capital requirements on a consolidated
basis for depository institution holding companies. These requirements must be not less than the
capital requirements established by the federal banking agencies to apply to insured depository
institutions under the prompt corrective action regulations implementing section 38 of the
Federal Deposit Insurance Act, nor quantitatively lower than the capital requirements that
applied to these institutions when the Dodd-Frank Act was enacted.
Section 171 of the Dodd-Frank Act was amended in 2014 (2014 Amendment) to provide
the Board flexibility when developing consolidated capital requirements for insurance depository
institution holding companies. The 2014 Amendment permits the Board, in establishing
minimum risk-based and leverage capital requirements on a consolidated basis, to exclude
companies engaged in the business of insurance and regulated by a state insurance regulator, as
well as certain companies engaged in the business of insurance and regulated by a foreign
insurance regulator.
Section 171 of the Dodd-Frank Act also provides that the Board may not require, under
its authority pursuant to section 171 of the Dodd-Frank Act or HOLA, a supervised firm that is
also a state-regulated insurer and files financial statements with a state insurance regulator or the
National Association of Insurance Commissioners (NAIC) utilizing only Statutory Accounting
Principles (SAP) to prepare such financial statements in accordance with U.S. generally accepted
accounting principles (GAAP). The Board notes that, unlike GAAP, SAP does not include an
accounting consolidation concept.
Consistent with these statutory requirements, the Board enacted the BBA as an
enterprise-wide risk-based capital framework for bank holding companies (BHCs) and SLHCs
that are significantly engaged in insurance activities. The BBA is an aggregation-based approach,
designed to comprehensively capture risk, including all material risks, at the level of the entire
enterprise or group. This information is not available from other sources.
Description of Information Collection
The FR Q-1, which consists of 14 reporting schedules, collects data regarding the
application of the BBA, as codified at Subpart J (Risk-Based Capital Requirements for Boardregulated Institutions Significantly Engaged in Insurance Activities) of the Board’s Regulation Q
- Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and
State Member Banks (12 CFR Part 217).
Respondent Panel
The FR Q-1 panel comprises top-tier depository institution holding companies
significantly engaged in insurance activities (insurance depository institution holding

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companies). Top-tier depository institution holding companies are considered to be significantly
engaged in insurance activities if:
(1) The institution is made subject to the BBA by order of the Board,
(2) The top tier depository institution holding company is an insurance underwriting
company, or
(3) The top tier depository institution holding company, held, as of June 30 of the previous
calendar year, 25 percent or more of its total consolidated assets in insurance
underwriting legal entities (other than assets associated with insurance underwriting for
credit risk). For the purposes of this determination top-tier depository institution holding
company must calculate its total consolidated assets in accordance with U.S. GAAP, if
GAAP financial statements are prepared for any regulatory purpose, including
compliance with applicable securities laws. If GAAP financial statements are not
prepared for any regulatory purpose, the top-tier depository institution holding company
may estimate its total consolidated assets under U.S. GAAP.
Frequency and Time Schedule
The FR Q-1 is submitted annually as of December 31, with a submission deadline of
March 31 of the following year. Reporters generally file the FR Q-1 electronically using an XML
format filed in Reporting Central or an Excel format filed in One Agile Supervision Solution
(OASiS).
Public Availability of Data
All items on the FR Q-1 are confidential with the exception of the cover page and the
section titled Publicly Reported Items (Column K, Building Block Available Capital; Column L,
Building Block Capital Requirement; and Column M, BBA Ratio) in Schedule VI, Overall
Results. This information will be available to the public via the National Information Center
public website, (https://www.ffiec.gov/NPW).
Legal Status
The Board is authorized to collect the information on the FR Q-1 from BHCs pursuant to
section 5(c) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1844(c)), which allows the
Board to require a BHC and any subsidiary of a BHC to submit reports regarding a firm’s
financial condition and compliance with applicable law, and from SLHCs pursuant to section 10
of the HOLA (12 U.S.C. § 1467a(b)(2)), which allows the Board to require any SLHC and
certain subsidiaries of a SLHC to submit a report containing such information concerning the
operation of the SLHC and its subsidiaries as the Board may require. The FR Q-1 report is
mandatory for reporting institutions.
If a reporting institution requests confidential treatment, the Board will determine
whether the information is entitled to confidential treatment on a case-by-case basis. To the
extent a respondent submits personal, medical, or similar files, the disclosure of which would
constitute an unwarranted invasion of privacy, the respondent may request confidential treatment
pursuant to exemption 6 of the Freedom of Information Act (FOIA) (5 U.S.C. § 552(b)(6)). To

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the extent a respondent submits confidential commercial or financial information in connection
with the FR Q-1, which is both customarily and actually treated as private by the reporting
institution, the respondent may request confidential treatment pursuant to exemption 4 of the
FOIA (5 U.S.C. § 552(b)(4)). To the extent a respondent submits information that is matter
contained in or related to examination, operating, or condition reports prepared by, on behalf of,
or for the use of an agency responsible for the regulation or supervision of financial institutions,
the information would be confidential pursuant to exemption 8 of the FOIA (5 U.S.C. §
552(b)(8)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On October 24, 2019, the Board published a notice of proposed rulemaking in the
Federal Register (84 FR 57240) requesting public comment on the implementation of the
FR Q-1. The comment period for this notice expired on December 23, 2019. The Board received
no comments specifically related to the Paperwork Reduction Act. The Board did receive two
comments relating to the difficulties of providing certain information for all subsidiaries. The
Board lowered the reporting burden by adding a materiality threshold that will eliminate some of
the reporting on immaterial inventory companies. On November 27, 2023, the Board published a
final rule in the Federal Register (88 FR 82950). The final rule is effective on January 1, 2024.
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR Q-1 is 1,097
hours. The Board estimates that the average hours per response for initial setup would be 175.50
and for ongoing reporting would be 43.88. The burden estimate was produced using the standard
Board burden calculation methodology.These reporting requirements represent less than 1
percent of the Board’s total paperwork burden.

FR Q-1
Initial setup
Ongoing

Estimated
number of
respondents3

Estimated
annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

5
5

1
1

175.50
43.88

878
219
1,097

Total

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Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets). Size standards effective March 17, 2023. See
https://www.sba.gov/document/support-table-size-standards.

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The estimated total annual cost to the public for the FR Q-1 is $72,676.4
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
report is $27,500 per year.

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Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $22, 45% Financial
Managers at $80, 15% Lawyers at $79, and 10% Chief Executives at $118). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2022, published April 25, 2023, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations
are defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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