MetLife has announced a plan to separate a substantial portion of its US retail segment and it is currently looking at structural alternatives such as a public offering of shares in an independent, publicly traded company, a spin-off, or a sale.
In a decision partly driven by a strategic review, the company also said its Systemically Important Financial Institution (Sifi) designation was an important factor.
In a statement that will resonate with other Sifi insurers such as AIG, MetLife said its US retail segment risks higher capital requirements that could put it at a significant competitive disadvantage.
“Even though we are appealing our Sifi designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation of the business. An independent company would benefit from greater focus, more flexibility in products and operations, and a reduced capital and compliance burden,” MetLife said in a statement.
MetLife plans to include the following entities in the new company: MetLife Insurance Company USA, General American Life Insurance Company, Metropolitan Tower Life Insurance Company and several subsidiaries that have reinsured risks underwritten by MetLife Insurance Company USA.
Steven A. Kandarian, MetLife chairman, president and CEO, said: “This separation would also bring significant benefits to MetLife as we continue to execute our strategy to focus on businesses that have lower capital requirements and greater cash generation potential.”