14 January 2015 Insurance

MetLife contests SIFI designation

MetLife has sued the Financial Stability Oversight Council (FSOC) to overturn its preliminary designation as a systemically important financial institution (SIFI).

In September 2014, after finding out that MetLife had been primarily designated, Steven Kandarian, chairman, president and chief executive officer, issued a statement saying that his company “strongly disagrees”.

Following the announcement that it has filed an action in the US District Court for the District of Columbia, Kandarian said: “We had hoped to avoid litigation after we presented substantial and compelling evidence to FSOC demonstrating that MetLife is not systemically important. Now we will take the next step in the process established by the Dodd-Frank Act and ask a federal judge to review FSOC’s decision.”

He added that a new federal standard for just the largest life insurers will drive up the cost of financial protection for consumers without making the financial system any safer.

“The government should preserve a level playing field in the life insurance industry. If additional regulation is necessary, the government has a superior tool at its disposal – an approach that focuses on potentially systemic activities regardless of the size of the firm. FSOC has already embraced that activities-based approach for the asset management industry,” he said.

Kandarian continued: “FSOC’s designation of MetLife is premature. FSOC has designated non-bank SIFIs before the rules governing these companies have even been written. The Council should wait until the rules are in place and it knows the impact on designated firms.”

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