MetLife is taking its battle against federal financial regulators to court.
The life insurer announced Tuesday morning that it is suing to overturn a decision by regulators that it is a “systemically important financial institution,” constituting a threat to the overall financial system if it failed.
It was given the “systemically important” status by the Financial Stability Oversight Council, the super-group of financial regulators charged by the 2010 Dodd-Frank financial reform law with identifying potential threats to the economy emanating from beyond Wall Street.
The label means that MetLife would essentially be regulated like a big bank, with higher capital levels and oversight by the Federal Reserve.
Having exhausted an appeal to the council, MetLife will now fight the label in the U.S. District Court for the District of Columbia.
“We had hoped to avoid litigation after we presented substantial and compelling evidence to FSOC demonstrating that MetLife is not systemically important,” MetLife CEO Steven Kandarian said. “Now we will take the next step in the process established by the Dodd-Frank Act and ask a federal judge to review FSOC’s decision.”’
Having already presented the case that its life insurance business is not a threat to the financial system in the fall, MetLife now faces a tough task in court. To eliminate the label, the court must determine that the council acted arbitrarily and capriciously.
Although the council has previously named insurance companies American International Group and Prudential Financial “systemically important,” neither of those companies attempted to challenge the designation in court.
Kandarian argued that “adding a new federal standard for just the largest life insurers and retaining a different standard for everyone else will drive up the cost of financial protection for consumers without making the financial system any safer.”
Kandarian added that the council had an alternative available, namely to focus on risky activities in the life insurance industry, rather than on the size of one particular company.
MetLife is being advised by law firms Gibson, Dunn & Crutcher and Sullivan & Cromwell.
