MetLife CEO ‘Strongly Disagrees’ With FSOC Preliminary SIFI Designation
September 5, 2014 by Jeff Jeffrey
WASHINGTON – MetLife Inc. has become the third insurance company to be designated as a systemically important financial institution.
MetLife Inc. Chairman, President and Chief Executive Officer Steven A. Kandarian said the company “strongly disagrees” with the FSOC’s vote. The company is not ruling out any of the available remedies under Dodd-Frank to contest a SIFI designation, he said in a statement.
Companies that receive a SIFI designation are subject to additional regulatory oversight by the Federal Reserve Board.
Following the meeting, the FSOC provided the company with a written explanation of the basis of the proposed determination, according to a readout of the meeting given to reporters by the Treasury Department.
“MetLife is not systemically important under the Dodd-Frank Act criteria,” Kandarian said. “In fact, MetLife has served as a source of financial strength and stability during times of economic distress, including the 2008 financial crisis.”
Kandarian said the current regulatory system oversees a stable industry that pays out more than $500 billion every year.
“Imposing bank-centric capital rules on life insurance companies will make it more difficult for Americans to buy products that help protect their financial futures,” Kandarian said. “At a time when government social safety nets are under increasing pressure and corporate pensions are disappearing, the goal of public policy should be to preserve and encourage competitively priced financial protection for consumers.”
MetLife has 30 days to request a hearing before the Council to contest the proposed determination.
If MetLife’s designation becomes final, it will join American International Group Inc. and Prudential Financial Inc. as the only other insurance companies to be named SIFIs.
Meanwhile, the FSOC is facing criticism from U.S. House Republicans about its “disparate treatment” of non-bank companies under consideration for systemically important financial institution designations. Earlier this week, seven Republicans lawmakers said in a letter to Treasury Secretary Jacob “Jack” Lew that the FSOC has not done enough to show that non-bank companies, including insurance companies, could pose systemic risks to the U.S. financial system. The House GOP members were led by Rep. Scott Garrett, R-N.J. (Best’s News Service, Sept. 3, 2014).
Metropolitan Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior). On Sept. 4, shares of MetLife Inc. (NYSE: MET) closed at $55.42, up 0.43% from the previous closing price.