Metlife building

MetLife to Spin Off B/Ds to Avoid SIFI Designation

MetLife announced plans Tuesday to split off its U.S. retail operations, which include its broker/dealer and advisory operations, as well as life insurance, variable annuities and property-casualty units.

MetLife said it is still considering its options in how best to separate the business lines, including a public offering of shares in an independent company, a spin-off, and a sale. If the separation does take the form of a public offering, MetLife expects it would file with the Securities and Exchange Commission in about six months.

The move is driven, in part, because MetLife’s U.S. retail division has been classified as part of a Systemically Important Financial Institution (SIFI) and “risks higher capital requirements that could put it at a significant competitive disadvantage,” Steven A. Kandarian, chairman, president and CEO, said in a statement.

“Even though we are appealing our SIFI designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation of the business,” he added. “An independent company would benefit from greater focus, more flexibility in products and operations, and a reduced capital and compliance burden.”

The new spin-off—which would be led by executive vice president Eric Steigerwalt—represents about 20 percent of MetLife's operating earnings as of Sept. 30, 2015, the company said. Currently MetLife employs 28,000 people in the United States.

MetLife’s captive brokerage operations have gone through several upheavals in recent years. In addition to slashing employee headcounts, Metlife revamped the unit in October 2013, pulling MetLife Securities Inc., New England Securities Inc. and MetLife Resources  together under a new group titled the MetLife Premier Client Group.

Prior to that, in April 2013, MetLife sold Tower Square and Walnut Street Securities b/ds to Cetera for an undisclosed sum. At the time of the deal, Tower Square and Walnut Street had a combined $25 billion in assets under management and 850 advisors.

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