MetLife Inc., the biggest U.S. life insurer by assets, was labeled a systemically important financial institution by a council of regulators and said it will consider whether to sue the government over the decision.
The Financial Stability Oversight Council voted to designate New York-based MetLife a SIFI, the insurer said Thursday in a statement. The ruling subjects MetLife to stricter Federal Reserve oversight that could include tougher capital, leverage and liquidity requirements. The company can appeal in U.S. district court within 30 days.
“We continue to believe that MetLife is not systemically important,” the insurer said in the statement. “The company will carefully review the designation rationale as it considers its next steps.”
MetLife declined 0.8 percent to $53.60 at 4:35 p.m. in New York. The insurer made its announcement after the close of regular trading.
The council proposed the designation in September by a 9-0 vote, with former Kentucky insurance regulator Roy Woodall voting “present.” Chief Executive Officer Steven Kandarian had said that the company “strongly disagrees” and wasn’t ruling out “any of the available remedies” to contest the designation. MetLife challenged the decision at a Nov. 3 hearing.
The company has said that it wouldn’t pose a risk to the broader financial system even if it were to fail, and Kandarian has called the insurance industry a source of stability. MetLife, based in New York, didn’t take a bailout during the 2008 financial crisis.
MetLife said today that FSOC should focus on activities that pose systemic risks, rather than on individual companies.
“FSOC has already embraced this activities-based approach for the asset-management industry but has rejected it for the life-insurance industry,” MetLife said in its statement.
U.S. lawmakers voted last week to give the Fed more flexibility in how it sets rules after insurers said they shouldn’t be subject to standards set for banks. Kandarian, in a Dec. 10 statement, praised Congress for passing the legislation, which he said would give the central bank the “opportunity to write rules that will preserve competition.”
The FSOC, which has 10 voting members and is led by Treasury Secretary Jacob J. Lew, doesn’t release the names of companies until at least one business day after the final designation is made. Voting members also include the heads of the Fed, the Securities and Exchange Commission and the Federal Deposit Insurance Corp.
The council has designated three other non-bank financial companies systemically important: insurers American International Group Inc. and Prudential Financial Inc., and General Electric Co.’s finance arm. A two-thirds vote, including Lew’s, is required.
AIG, the insurer that required a $182.3 billion bailout in the financial crisis, and GE Capital opted against challenging the risk tag. Prudential, the second-largest U.S. life insurer, lost its challenge to the council’s ruling last year. The Newark, New Jersey-based company opted against appealing the ruling in federal court.
Created by the 2010 Dodd-Frank law, the council is charged with monitoring potential threats to the financial system. Under Dodd-Frank, bank-holding companies with more than $50 billion in assets, such as Citigroup Inc. and JPMorgan Chase & Co., are overseen by the Fed.
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