Steven Kandarian, MetLife Inc.’s outgoing chief executive officer, delivered a note of caution to regulators: Keep a close eye on some of the new rivals in the life insurance industry.
“The regulators have to look very hard at the new entrants in terms of how they’re investing their money in particular — what kind of liabilities are on their balance sheet,” Kandarian said Monday in an interview on Bloomberg Television, without naming the competitors. “Regulators should look hard at this and make sure that the risks being taken on by these new entrants are appropriate because, again, we pick up the tab if they fail.”
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While it’s not unusual for industry stalwarts to be wary of new competitors, private equity and bank-tied annuity sellers have been pushing into the market and climbing the ranks in recent years. Global Atlantic Financial Group, which Goldman Sachs Group Inc. helped form, and Athene Holding Ltd., which has ties to Apollo Global Management LLC, were among the largest U.S. and Canadian life and health insurers last year. Athene uses Apollo as an investment manager and has bet more on structured credit than some of its peers.
When a company fails, insurers may have to pay into guaranty funds which provide protection for consumers, meaning that many companies could be on the hook financially for another insurer’s failure.
“I’m a big proponent of a free market — anyone can come into the pool — but we all have to play by the same rules,” Kandarian said Monday.