A large insurer has decided not to participate in the U.S. Treasury Department’s Capital Purchase Program.
The company, MetLife, New York, says it is one of the 19 U.S. banking organizations participating in the Treasury Department’s capital planning exercise, or “stress testing” program.
“MetLife is working closely with the Federal Reserve on this exercise,” the company says.
MetLife has been a federally chartered bank holding company since it set up MetLife Bank N.A. in 2001.
The company does not need to participate in the CPP, a component of the Troubled Asset Relief Program, because it already is well-positioned, according to MetLife Chairman C. Robert Henrikson.
MetLife has about $5 billion in excess capital, a strong balance sheet and leading market positions in the group and individual insurance businesses, Henrikson says in a statement.
MetLife repositioned its investment portfolio more than a year ago in anticipation of the current recession, it completed a $2.3 billion common stock offering in October 2008, and it remarketed more than $1 billion in debt earlier this year, Henrikson says.
“We have therefore decided not to participate in the [CPP],” Henrikson sas. “We are confident that we have the financial strength to continue to succeed now and over the long-term.”
Some expect the Treasury Department to describe its plans for providing CPP aid for insurers sometime this week.
MetLife decided to issue a statement at this time because there has been “continuous speculation” about the company’s plans regarding CPP funds, according to company spokesman John Calagna.
“We wanted to be clear that we believe we have the capital and the financial strength to sustain our business without this assistance,” Calagna says.
Industry and government sources say 12 insurers originally applied for CPP assistance.
MetLife is the third to drop out within the last several weeks.
Genworth Financial Inc., Richmond, Va., said the Treasury Department told it last week that it was ineligible for the program.
Protective Life Corp., Birmingham, Ala., dropped out because its contract to buy a Florida bank holding company required it to buy the company with TARP capital before April 1.
A fourth company, Lincoln National Corp., Radnor, Pa., recently said it was withdrawing from consideration for another, separate program, the Temporary Liquidity Guarantee Program. Lincoln has not commented on the CPP since it announced in November 2008 that it had applied to participate in the program.
Additional information in this article was contributed by Allison Bell.
CORRECTION: An earlier version of this story gave an incorrect description of Lincoln’s involvement in TARP programs.