MetLife Could Be Deemed Threat To US Financial System

U.S. regulators are ready to label MetLife Inc. a potential threat to the financial system, subjecting the insurer to oversight by the Federal Reserve, according to people with knowledge of the matter. An article in Bloomberg this morning is receiving a lot of attention. The article stated that A decision by the Financial Stability Oversight Council may come as early as July 31, when the panel is tentatively planning to meet, said the people, who asked not to be identified because the process isn’t public. The vote could be delayed briefly because the council hasn’t formally closed its review of the company, the people said.

MetLife, the biggest U.S. life insurer, could be subjected to stricter capital, leverage and liquidity requirements as a result of Fed supervision. The company has been under consideration as systemically important for more than a year, and its executives have met more than 10 times with council staff members to argue it doesn’t pose a risk.

A spokesman for New York-based MetLife, and Suzanne Elio, a Treasury spokeswoman, declined to comment. The council’s rules prohibit it from disclosing the names of companies unless a designation is made.

MetLife shares were little changed at $55.50 yesterday, after earlier falling as much as 1.8 percent.

The council vote would be a proposed designation, and MetLife would have 30 days to request a hearing before the FSOC to contest the decision. After a hearing, the regulators would hold a final vote on whether to designate MetLife. The company reports earnings after the market closing July 30 and will hold an investor call July 31, the same day the FSOC is planning to meet.

MetLife is one of the most popular and well known US insurers. Every household in American is aware of their advertising with the famous “Snoopy” dog as its talking mascot. MetLife operates one of the largest online self-insurance sites in the world, offering an extensive array of consumer retail insurance, ranging from Home Owners protection, to Automobile, Life Insurance and more.

The New York Times business summary of MetLife reads as follows:

MetLife, Inc. (MetLife) is a provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 50 countries. Through its subsidiaries and affiliates, MetLife operates in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. It is organized into six segments: Insurance Products, Retirement Products, Corporate Benefit Funding and Auto & Home (collectively, U.S. Business), and Japan and Other International Regions (collectively, International). U.S. Business provides insurance and financial services products, including life, dental, disability, auto and homeowner insurance.

The Financial Stability Oversight Council could make the decision on July 31, when it is likely to meet, according to the Bloomberg report. The vote could, however, be delayed as the council has not formally closed its review of the insurer, which has been under consideration for being labeled systemically important for more than a year, according to the Bloomberg report. MetLife would have 30 days to request a hearing before the FSOC to contest the decision. The regulators would then hold a vote to make a final decision about designating MetLife.