Please ensure Javascript is enabled for purposes of website accessibility

The Moniker MetLife Just Can't Seem to Shake

By Amanda Alix - Apr 11, 2013 at 11:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Metlife’s chief continues to argue against the "systemically important" label.

When megainsurance company MetLife (MET 3.58%) finally closed the sale of its retail banking operations to General Electric's (GE 3.33%) GE Capital this past January, enabling it to deregister as a bank, it likely heaved a figurative sigh of relief. The insurer had jumped through many regulatory hoops in order to get this deal done and free itself of tighter controls being levied on any entity that includes a banking platform.

But MetLife knew it wasn't out of the woods yet and would soon face another scuffle with regulators, this time concerning its status as a "systemically important financial institution."

MetLife chief takes his case to the public
The potential designation as a SIFI is the reason for an ongoing battle between MetLife and federal regulators, who are also looking at fellow big insurance companies AIG (AIG 1.87%) and Prudential (PRU 2.35%) -- as well as GE Capital -- with a newly discerning eye under Dodd-Frank. The freshly created Financial Stability Oversight Council has been charged with rooting out companies that might cause economic chaos if they fail, and all three insurers were notified last fall that they had entered the third stage of scrutiny in this process.

MetLife's CEO has been arguing against his company being folded into this category for at least a year, and likely hoped that the insurer's de-banking would help sway regulatory minds. But MetLife is still on the roster, and CEO Steven Kandarian is on a mission to prove to one and all that insurers are not the threat to the overall economy that the government alleges.

Kandarian spoke at the U.S. Chamber of Commerce's Capital Markets Summit in Washington, DC yesterday, noting that the insurance industry was not a major player in the financial crisis. What about AIG, you ask? According to Kandarian, AIG's life insurance units were "victims" of the insurer's larger financial problems, though he did acknowledge that it was that company's tribulations that prompted this review of the industry.

Would consumers suffer under MetLife SIFI status?
Certainly, AIG and Prudential must be grateful for Kandarian's boosting of their cases, but the MetLife CEO went even further, suggesting that additional regulation would be a bad thing for consumers. A case in point is Kandarian's assertion that legislating higher capital stores might preclude the selling of variable annuities, products that are immensely popular, but also involve the need for additional capital to be held against them.

As the FOMC moves on with its consideration of these companies' financial riskiness, it will be interesting to see whether the investigating body makes any response to Kandarian's allegations, thereby giving the public a clearer idea of exactly what the council's deliberations are based upon, and how the outcome will affect both consumers and investors. Until then, it appears, Kandarian will soldier on.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Prudential Financial, Inc. Stock Quote
Prudential Financial, Inc.
PRU
$104.56 (2.35%) $2.40
MetLife, Inc. Stock Quote
MetLife, Inc.
MET
$66.91 (3.58%) $2.31
American International Group, Inc. Stock Quote
American International Group, Inc.
AIG
$57.73 (1.87%) $1.06
General Electric Company Stock Quote
General Electric Company
GE
$77.01 (3.33%) $2.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.