MetLife, Inc. was one of four large financial institutions on March 13 deemed to have failed a "stress test" imposed on large banking institutions by the Federal Reserve Board. The decision was roundly criticized by MetLife and insurance analysts, who said that MetLife was evaluated by criteria used for banks, not insurance companies.
"It is likely to be reversed later this year as Fed officials recognize the differences between banks and insurers," said John Nadel, an analyst at Sterne Agee in New York. He cautioned that the impact of the decision was not likely to be felt by other insurers, but that MetLife, along with Pru and AIG, were likely to be designated as systemically important financial institutions, or SIFI, later this year, making them subject to additional federal oversight.
MetLife chairman and CEO Steven A. Kandarian said that amongst the things MetLife was penalized for by the Fed was the holding of funds of variable annuity customers in separate accounts. MetLife, according to LIMRA, is the largest seller of VAs that offer "living benefits" payouts.
