(Bloomberg) — MetLife Inc., the largest U.S. life insurer, has been getting even bigger.
The insurer expanded this year to more than $900 billion in assets, passing Goldman Sachs Group Inc. to become the fifth- largest company in the Standard & Poor’s 500 Index on that basis.
MetLife also eclipses insurers Prudential Financial Inc. and American International Group Inc. That status will make it harder for the New York-based company to avoid being designated a systemically important financial institutions by federal regulators meeting today, said Sean Dargan, an analyst at Macquarie Group Ltd.
“My gut feeling is that after having designated Pru and AIG, that there’s probably not a chance that they escape,” Dargan said of MetLife by phone. “If you look at the criteria, if you look at who else has been named, I’m working under the assumption that Met is going to be a SIFI.”
To figure out which non-bank companies could pose systemic risks, the Financial Stability Oversight Council examines how interconnected they are with other firms and how disruptive their failure would be to a marketplace. Big banks like Goldman Sachs are automatically considered SIFIs. FSOC, which has 10 voting members and is led by Treasury Secretary Jacob J. Lew, also takes into account a firm’s liquidity, existing regulatory scrutiny and leverage.
When considering whether to designate a company, the council looks at “the unique risks to U.S. financial stability that each non-bank financial company may pose,” according to a fact sheet released by Treasury.
Size alone doesn’t make a company systemic, said Joseph Engelhard, a former Treasury official who is now senior vice president at Washington-based consultant Capital Alpha Partners LLC. If a company were to fail and its competitors could perform the same function, the company probably isn’t a SIFI, Engelhard said.
“Money can just be transferred to other firms,” he said.
About a third of MetLife’s assets are tied to separate accounts, where outside parties may bear the risk of price drops.