It seems that not even the sale of its advisor force to MassMutual will free MetLife from its label as a systemically important financial institution (SIFI).
During the Financial Stability Oversight Council’s (FSOC) meeting on Wednesday, the council voted not to rescind MetLife’s designation, which can lead to higher capital requirements. The FSOC voted in December 2014 to designate MetLife a systematically important financial institution, a decision the company has been fighting ever since.
In January, MetLife filed a lawsuit challenging the label in a case that’s been followed closely by other U.S. insurers, including AIG, Prudential and GE. In addition to the lawsuit, the company announced plans at the end of January 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.
The move was driven, in part, because MetLife’s U.S. retail division has been classified as part of a systemically important financial institution and “risks higher capital requirements that could put it at a significant competitive disadvantage,” Steven A. Kandarian, chairman, president and CEO of MetLife, said in a statement in January.
“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.”
After much speculation, MetLife sold its 4,000 advisor distribution network to MassMutual on Monday for $300 million.