NEW YORK, Jan. 13, 2015 – MetLife, Inc. will file an action in the U.S. District Court for the District of Columbia today to overturn the Financial Stability Oversight Council’s (FSOC) designation of the company as a non-bank systemically important financial institution (SIFI).
“We had hoped to avoid litigation after we presented substantial and compelling evidence to FSOC demonstrating that MetLife is not systemically important,” said Chairman, President and CEO Steven A. Kandarian. “Now we will take the next step in the process established by the Dodd-Frank Act and ask a federal judge to review FSOC’s decision.”
Under Section 113 of Dodd-Frank, the FSOC is authorized to determine that a nonbank financial company’s material financial distress — or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities — could pose a threat to U.S. financial stability. Such companies will be subject to consolidated supervision by the Federal Reserve and enhanced prudential standards.
In 2013, the FSOC voted to designate American International Group, Inc. (AIG), General Electric Capital Corporation, Inc., and Prudential Financial, Inc. While Prudential considered challenging the designation, it opted not to, while AIG and GE Capital did not contest their designations. On Dec. 18, 2014, the FSOC voted to designate MetLife, Inc. MetLife is the first of the four non-bank SIFIs to challenge the designation in court.
In Dodd-Frank (Section 113(h), “Judicial Review”), Congress specifically provided that any company designated as a SIFI may petition the federal courts for an order “requiring that the final determination be rescinded.” In taking the unusual step of providing for judicial review, Congress recognized that the implications of a designation were potentially so negative that independent review by the courts should be available. MetLife’s filing will be available online later today.
“MetLife has always supported robust regulation of the life insurance industry and has operated under a stringent state regulatory system for decades,” Kandarian said. “However, adding a new federal standard for just the largest life insurers and retaining a different standard for everyone else will drive up the cost of financial protection for consumers without making the financial system any safer. The government should preserve a level playing field in the life insurance industry. If additional regulation is necessary, the government has a superior tool at its disposal – an approach that focuses on potentially systemic activities regardless of the size of the firm. FSOC has already embraced that activities-based approach for the asset management industry.”
Kandarian continued, “FSOC’s designation of MetLife is premature. FSOC has designated non-bank SIFIs before the rules governing these companies have even been written. The Council should wait until the rules are in place and it knows the impact on designated firms.”
“It is not enough to designate companies as SIFIs merely because they are big,” Kandarian added. “The Dodd-Frank Act is clear that size alone does not make a company systemic. We look forward to a legal review of FSOC’s decision.”
Gibson, Dunn & Crutcher LLP and Sullivan & Cromwell LLP are serving as outside counsel to MetLife, Inc. on SIFI-related issues.
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.
- Political reaction: Republicans propose The American Health Care Act
- State Farm reports $1.2 billion pre-tax operating loss in 2016
- DOL aims for initial 60-day delay in fiduciary rule effective date
- Report aims to put a stop to ‘Use It and Lose It’ homeowner policies
- Most LTCI claims begin and end at home; insurers pay out $8.65 billion in 2016 claims, new data confirms
- MetLife annuity and life products officially rebranded under Brighthouse Financial name
- 2017 health insurance trends: HSAs, wellness incentives and other tactics employers looking at to reduce costs
- Advances in underwriting: Saliva samples now being used to analyze biomarkers of settlement prospects