When megainsurance company Metlife Inc (NYSE:MET) finally closed the sale of its retail banking operations to General Electric Company (NYSE:GE)‘s GE Capital this past January, enabling it to deregister as a bank, it likely heaved a figurative sigh of relief. The insurer had jumped through many regulatory hoops in order to get this deal done and free itself of tighter controls being levied on any entity that includes a banking platform.
But Metlife Inc (NYSE:MET) knew it wasn’t out of the woods yet and would soon face another scuffle with regulators, this time concerning its status as a “systemically important financial institution.”
MetLife chief takes his case to the public
The potential designation as a SIFI is the reason for an ongoing battle between Metlife Inc (NYSE:MET) and federal regulators, who are also looking at fellow big insurance companies American International Group Inc (NYSE:AIG) and Prudential Financial Inc (NYSE:PRU) — as well as GE Capital — with a newly discerning eye under Dodd-Frank. The freshly created Financial Stability Oversight Council has been charged with rooting out companies that might cause economic chaos if they fail, and all three insurers were notified last fall that they had entered the third stage of scrutiny in this process.
Metlife Inc (NYSE:MET)’s CEO has been arguing against his company being folded into this category for at least a year, and likely hoped that the insurer’s de-banking would help sway regulatory minds. But Metlife Inc (NYSE:MET) is still on the roster, and CEO Steven Kandarian is on a mission to prove to one and all that insurers are not the threat to the overall economy that the government alleges.
Kandarian spoke at the U.S. Chamber of Commerce’s Capital Markets Summit in Washington, DC yesterday, noting that the insurance industry was not a major player in the financial crisis. What about American International Group Inc (NYSE:AIG), you ask? According to Kandarian, AIG’s life insurance units were “victims” of the insurer’s larger financial problems, though he did acknowledge that it was that company’s tribulations that prompted this review of the industry.