WASHINGTON (AP) — US regulators have labeled insurer MetLife as a potential threat to the financial system, a designation that brings stricter government oversight.
MetLife said Thursday that the Financial Stability Oversight Council has designated the company as “systemically important.” As a result, MetLife must increase its cushion of capital against losses, limit its use of borrowed money and submit to inspections by examiners. MetLife will come under the supervision of the Federal Reserve. Its primary regulator now is New York state.
Regulators saw a need for closer oversight of big financial companies that aren’t banks after the near-collapse of insurer American International Group threatened to bring down the global system in September 2008 during the crisis. The idea is to prevent a catastrophic collapse that could lead to another financial meltdown.
New York-based MetLife is the largest US life insurer, with about $475 billion in assets under management.
In a statement, MetLife said it is “disappointed” in the decision and has given the regulators evidence showing it is not systemically important as defined by law. The insurer maintains that its industry is less risky than banking, and that imposing bank capital rules on life insurance companies could make it harder for Americans to buy insurance products.
MetLife will have 30 days to decide whether to appeal the regulators’ action in federal court.