MetLife Approaches With Breakup Plan Since Washington Court Declares SIFI Label Unlawful

By Staff Writer

Mar 31, 2016 07:54 AM EDT

MetLife Inc., a holding corporation for the Metropolitan Life Insurance Company, has witnessed victory on Wednesday in its battle against US regulators. The ruling may pose far reaching impact over the country's financial system.

The US regulators have acted unlawfully deciding the insurance group deserving tougher regulations as a 'systematically important financial institution' (SIFI), observes a Washington court. The ruling appears as a huge blow to the Obama administration. However, the government is allowed to appeal against the ruling, reports Financial Times.

The court ruling may also be significant for two of MetLife's biggest rivals- Prudential Financial Inc. and American International Group Inc. The federal regulators have also labeled both of them as systematically important unlike MetLife. Referring the MetLife ruling, both of them are expected to consider challenges against the labeling decision, predict analysts, according to a report published in The Wall Street Journal.

The federal regulators have labeled a number of banks and other financial institutions with 'systematically important' tags. Authorities have acted so arguing that failure of those SIFIs may exert threat to the stability of the US economy. The lone non-financial institution receiving the title is General Electric Co., reports MarketWatch.

MetLife has announced in January planning to go ahead with the divestment of a large piece of its US life insurance unit. The insurer considers the split as strategic along with regulatory, cites Steven Kandarian, chief executive officer of MetLife. But the move has faced obstacles due to SIFI labeling by the regulators.

Designation of MetLife as SIFI has been imposed following voting by the members of the Financial Stability Oversight Council (FSOC). The label attracts additional regulatory scrutiny and higher capital requirements. Fed chair Janet Yellen and treasury secretary Jack Lew are among the ten members of FSOC.

However, an FSOC spokesperson has strongly disagreed with the court verdict. He confidently considers FSOC's designation as lawful and vows to defend the process vigorously.

MetLife is widely acknowledged as the largest US insurer by assets. The court ruling has pushed shares in MetLife by 5.2% on Wednesday. The ruling appears as an important achievement of the MetLife CEO who has taken over the charge a year earlier.

MetLife Inc., the largest US insurer by assets, has witnessed victory in a Washington court against FSOC's unlawful labeling as SIFI. The attributed designation has hampered its plan for divestment of a large piece of its US life insurance unit. The ruling appears to be a great triumph for the MetLife CEO since his inception a year back.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics