mr. mcraith which companies does that describe? which existing companies pose systemic risk if they fail? >> not one insurance company based in the united states presents systemic risk according to the definition you provided. >> what about aig? >> aig, 71 u.s. based insurance subsidiaries, were financially strong, remain financially strong. not one of those companies independently ever presented any systemic risk. >> as a group do they pose systemic risk? >> as a holding company, its financial products division, which out of london, which is not appropriately regulated and not a matter of

mr. mcraith, and i saw mr. skinner -- i shouldn't make comments, maybe disagree with you. my wife always says that. with regard to the aig situation and you were running down the scenario with regard to who's looking at it and raised theish issue, portions of the units were overseas and london specifically. i believe i've heard that before, that part of the issue mere is that it was not -- not state regulator necessarily, federal regulators or lack there of, as well as the european arm of it, looking at it, maybe missing it as well. want to chime in on that? >> i think the important point is that regulators need to have formalized structure for information sharing, for communication, not because of the risk because frankly, there are large companies who will present risk. it's to avoid the disruption so that the structure of the stability -- >> i guess what i heard, mr. skinner, you can comment, was there failure, not only on the federal reserve part or federal regulators, was there also a failure from the european regulators looking at this situation and not catching this

mr. mcraith. >> chairman, ranking members of the committee, thank you for inviting me to testify. i'm michael mcraith, director of insurance in the state of illinois. i speak today on behalf of the flagsal association of insurance commissioners. the insurance industry, even in these difficult times, has withstood the collapses that echo through other financial sectors. we likely agree insurance regulation must not only serve industry needs but prioritize u.s. consumers. consumer protection has been, is and will remain priority one for state regulators. it bears repeating that we supervise 36% of the world's insurance market. our states, individual states include four of the top ten and 28 of the top 50 world markets. alone we surpass two, three and four combined. to be sure as with any dynamic industry, insurance regulation must modernize and it does. we worked with your great staff, mr. chairman, to fashion the office of insurance information which if passed would provide a federal focal point for international trade matters and federal data analysis. the naic maintains the world'

mr. chairman. i would like to give a shout out to michael mcraith and all our witnesses. until this year the role of federal involvement in the insurance industry is centered on whether to establish a federal insurance regulator. i worked with congressman royce on legislation to establish a federal regulator for the insurance industry. last congress our bill was focused on consumer choice and protections, advantages for agents and industry efficiencies. much has changed in our financial system since the last congress. the collapse of aig, the world's largest insurer has proven to be one of the most costly and dangerous corporate disasters in our nation's financial history, with nearly $180 billion of federal tax dollars committed to aig, plus $22 billion to other insurers. the federal government has made an unprecedented investment in an industry over which it has no regulatory authority. the need for federal regulatory oversight has never been greater. having a federal insurance commissioner who can work with the expected systemic risk regulator or council is vital to in