MetLife CEO rejects SIFI

Instead of SIFIs, Kandarian said, a better approach to enhanced regulation of insurance companies would be to target those activities that caused the financial crisis in the first place.

"In short, policymakers should adopt an activities-based approach to systemic risk, rather than an institutions-based approach," Kandarian said.

He said such an approach "would recognize that traditional life insurance companies did not cause the financial crisis.

"It would recognize that applying bank-centric capital rules to a few large insurers would result in competitive distortions and harm to consumers," he added. "And it would recognize that preserving robust competition in the life insurance sector is the best way to maximize the availability and affordability of financial protection for consumers."

Kandarian made his comments against the background of what some regard as imminent action by the Financial Stability Oversight Council (FSOC) to designate certain nonbanks, such as insurers, as SIFIs, therefore subjecting them to oversight by the Federal Reserve Board and requiring enhanced capital as well as additional oversight.

AIG and Prudential Financial Inc., have publically disclosed that they are in the third and final stage of the FSOC review of SIFI designation. MetLife has repeatedly denied that it is being evaluated as a SIFI, although it acknowledges that it is a candidate.

The Fed set the stage for the FSOC action last week when it adopted a final rule that establishes the requirements for determining when a company is "predominantly engaged in financial activities."

The final rule will be designated as 12 C.F.R. Part 242 – Regulation PP. 

The requirements set forth in the final rule will be used by the FSOC when it considers the potential designation of a nonbank financial company for consolidated supervision by the FRB upon the determination by the FSOC that such a company could pose a threat to U.S. financial stability, according to lawyers at Goodwin Procter. 

In an SEC statement earlier this week justifying its decision to divest itself of its savings and loan, W.R. Berkley & Co. said federal oversight meant it would have become subject to certain prior notification requirements and restrictions on dividends, stock repurchases, distributions, transactions with affiliates and compensation plans, and additional requirements related to its shareholders, management reporting and capital adequacy.