Prudential says will not appeal U.S. council's systemic tag WASHINGTON (Reuters) - Prudential Financial (PRU.N) said it will not ask a federal court to overturn a designation by the U.S. risk council that will subject the company to strict capital requirements and oversight by the Federal Reserve. The U.S. risk council designated Prudential Financial as "systemically important," a tag that means the insurance firm is so big and interconnected that its hypothetical collapse could have a broad and negative effect across the entire market. "The company will continue to work with the Board of Governors of the Federal Reserve System and other regulators to develop regulatory standards that take into account the differences between insurance companies and banks, particularly in the use of capital," the company said late Friday. Prudential disclosed earlier this summer that the Financial Stability Oversight Council, a new body of regulators created by the 2010 Dodd-Frank law, had decided to label the company as a "systemically important financial institution" or SIFI. Prudential is one of only three non-bank financial firms so far to be hit with the costly SIFI tag. The other two companies, AIG International (AIG.N) and GE Capital, a unit of General Electric (GE.N), did not appeal. Certain large banks, including Goldman Sachs Group Inc (GS.N) and Citigroup Inc (C.N) automatically received the SIFI designation. At the time, Prudential vowed to fight the decision through a closed-door hearing process before the FSOC. Prudential argued that it is not too big to fail and that it would be wrong to submit an insurer to regulation designed for banks. The FSOC is chaired by Treasury Secretary Jack Lew and comprised of the country's top financial market and banking regulators. They are tasked with policing the marketplace for potential emerging risks and have the power to classify large firms that could topple markets as "SIFIs." Any firm that is dubbed a SIFI will face higher capital charges and other additional regulations. After the FSOC met behind closed doors early this year to consider Prudential's appeal of its designation, the company revealed in September that a majority of FSOC members had still voted in favor of designation. Many outside experts expected the company might consider appealing the decision in federal court. Had the company decided to keep on fighting, it would have been wading into uncharted legal territory. Reporting by Sarah N. Lynch; Editing by Bernard Orr and Andrew Hay