American International Group Inc (NYSE:AIG), MetLife, Inc. (NYSE:MET), and Prudential Financial Inc (NYSE:PRU) got some welcome, if anticipated, news yesterday when the House of Representatives passed the Senate’s version of an amendment to the Dodd-Frank Act giving the Federal Reserve the authority to issue different capital rules for insurance companies designated as systemically important financial institutions (SIFI) than the ones that already exist for major banks. Pres. Obama is expected to sign the bill, but it may still be several months before actual capital rules are finalized.

“We view this as a critical step in the regulatory process as it provides the Fed ample room to maneuver in developing rules and regulations specifically tailored to the business models and risks of insurance companies,” write Sterne Agee analysts John Nadel, Wesley Carmichael, and Michael Ward. “Although as is always the case, the devil will remain in the details.”

House Passes Senate Version Of Dodd-Frank Amendment

Dodd-Frank Act: House had previously passed its own version

The reason this wasn’t a surprise, is that the House of Representatives had already passed a similar bill back in September. It was just a matter of political wrangling to get the House and Senate versions to match up, but giving you said the authority to designate non-bank institutions as SIFIs without giving it the authority to tailor different rules for those institutions was widely seen as one of the defects of the Dodd-Frank Act. Fixing it, was more a question of when then if.

More than a year regulatory uncertainty continues

Federal Reserve Chair Janet Yellen said nearly a year ago that she intends to use that authority to create different rules for insurance companies, but how the capital rules will differ is still unclear. For now, American International Group Inc (NYSE:AIG), MetLife, Inc. (NYSE:MET), and Prudential Financial Inc (NYSE:PRU) still have to live with an uncertain regulatory future. While the insurance companies can’t be happy that they will have to deal with additional capital requirements, at least knowing what those requirements will be makes it easier for them to plan ahead.

Even though Prudential Financial Inc (NYSE:PRU) had a good day in trading today, American International Group Inc (NYSE:AIG) and MetLife, Inc. (NYSE:MET) were essentially flat. Like the insurers themselves, investors see this for the incremental steps that it is and will wait to get more details before they celebrate.