Why MetLife believes the scariest risk is being classified as risky
February 10, 2016 by KATHERINE CHIGLINSKY, ANDREW HARRIS, IAN KATZ
(Bloomberg) — For MetLife Inc. Chief Executive Officer Steve Kandarian, the scariest risk is being classified as risky.
MetLife lawyers go to court Wednesday seeking to overturn a too-big-to-fail designation in a lawsuit that could, if the insurer prevails, reduce the government’s ability to rein in large financial firms. If the company loses, Kandarian may face tougher oversight including harsher capital and leverage requirements, although final rules haven’t been written.
A U.S. panel has said a forced liquidation of MetLife could roil markets because of the insurer’s holdings of hard-to-sell securities and reliance on derivatives. Kandarian says the contracts actually help MetLife hedge risk and that insurers aren’t vulnerable to massive client withdrawals the way banks are. When asked by the Financial Stability Oversight Council, or FSOC, about his main worries, the CEO turned the tables on the group.