This year has been a rough one for life insurers like Metlife (NYSE:MET), as minuscule interest rates put restrictions on investment income, and the demand for their basic product wanes.

Metlife has been especially edgy, though, as post-crisis regulations pile up on companies with banking subsidiaries, as is the case with Metlife. The company has been continually frustrated by regulators in its efforts to unload its banking arm, but good news arrived, just in time for Christmas: The Office of the Comptroller of the Currency has given conditional approval  of the insurer's bid to sell its retail banking unit to GE's (NYSE:GE) financial section, GE Capital.

A protracted battle won
Metlife surely heaved a figurative sigh of relief, for the fight was a long one. Originally, the FDIC had jurisdiction over the sale, but terms were adjusted after several months with no progress, and the OCC became the agency to give its yay or nay. Though this is definitely a win for GE Capital and Metlife both, the unburdening of its retail deposits still might not remove the insurer from the government's regulatory crosshairs .

Metlife is anxious to raise dividends and institute share buybacks, but has been prevented from doing so by regulators. The insurer has been selling off anything to do with banking, having recently sold $70 billion of mortgage servicing rights to megabank JPMorgan Chase (NYSE:JPM), whose CEO Jamie Dimon is newly bullish on the housing recovery. With the sale of its deposits to GE Capital, the insurer will deregister  as a bank holding company, but it may still be considered a non-bank systemically important  institution by the government, which is currently mulling new regulations on this subject.

Other problems are evident, however
There are other issues, as well. Not only does it not have a closing date for the sale – which means that it might still face the 2013 stress test if things don't proceed quickly – it has also tamped down guidance for next year. The company announced that earnings may be substantially lower than analysts expect, and that a stock buyback probably isn't in the cards. Why so glum? You guessed it: super-low interest rates. The company expects tiny spreads to depress investment income into 2013, shrinking per-share earnings  below what was previously expected.

The annuity business took a hit this year, too. Metlife reported an $800 million  charge for Q4, due partly to plummeting interest rates, but also as a result of fixed-income products sold with variable annuities. Annuities have definitely lost their luster, and the company will reduce sales  of that product by 40% next year.

One Fool's take
These headwinds are strong, but some, such as teensy interest rate spreads, affect every company in the financial sector. Metlife has always been adept at insuring against interest rate changes through hedging programs, and will likely continue to do so.

Though 2013 isn't looking stellar, Metlife has a plan. The company expects to see a return on equity  of between 12% and 14% by 2016, despite low rates, compared with this year's ROE of around 11%. The company plans  to expand its non-domestic business, particularly in Asia, as well as trim costs to get to that robust ROE metric. Can Metlife pull it off? Time will tell – but I wouldn't bet against it.

Fool contributor Amanda Alix has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric Company and JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.