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October 03, 2014 at 01:56 PM
MetLife said in a securities filing that it will challenge its designation as a systemically important financial institutions (SIFI). That will require the Financial Stability Oversight Council (FSOC) to schedule an evidentiary hearing within 30 days, and notify the company within 60 days after that whether the decision to designate the company will be affirmed.
MetLife has been adamant that it does not constitute a threat to the stability of the financial system, and has lobbied strongly against such a designation. That includes enlisting congressional and business industry support for its position.
If designated as a SIFI, MetLife would be the third insurance company to be classified as SIFI. The other two are American International Group and Prudential Financial. GE Capital has also been designated as a non-bank SIFI.
The FSOC, noting MetLife’s strong opposition, has deliberated whether to designate MetLife as a SIFI for more than a year before informing MetLife formally on Aug. 5 that it had made a preliminary designation, subject to MetLife’s decision whether to accept or challenge such a designation.
In its statement disclosing the preliminary designation, Steven A. Kandarian, MetLife chairman, president and CEO, said that the company “strongly disagrees” with the decision and said the company is “not ruling out any of the available remedies under Dodd-Frank to contest a SIFI designation.”
The Aug. 5 ruling, however, was stronger than the FSOC designation of Prudential Financial, which prompted objections from two FSOC members. In this case, the FSOC said in a statement, the vote was unanimous, “with one member voting present.”
That, most likely, was S. Roy Woodall, Jr., independent member of the board with insurance expertise. He voted to oppose Pru Financial’s designation. At the same time, the non-voting member with insurance expertise on the FSOC will be different this time, because Adam Hamm, president of the National Association of Insurance Commissioners (NAIC) and North Dakota insurance commissioner, has been appointed to a two-year term as the state insurance commissioner representative on the FSOC. Hamm, a Republican, replaces Missouri Insurance Director John Huff, a Democrat.
Kandarian said in a Sept. 4 statement that “MetLife is not systemically important under the Dodd-Frank Act criteria. In fact, MetLife has served as a source of financial strength and stability during times of economic distress, including the 2008 financial crisis.”
