(Reuters) - MetLife Inc (MET.N), the largest U.S. life insurer, is not a systemically important financial institution whose failure could pose a threat to the nation’s financial stability, Chief Executive Steven Kandarian said.
Kandarian’s comments late on Tuesday came after the U.S. financial risk council moved closer to designating MetLife as systemically risky.
He said in a statement MetLife was notified by the Financial Stability Oversight Council (FSOC) that it had reached “Stage 3” in the process to determine whether the insurer would be named a non-bank Systemically Important Financial Institution (SIFI).
MetLife would be subject to stricter regulatory oversight if was given that designation.
“Not only does exposure to MetLife not threaten the financial system, but I cannot think of a single firm that would be threatened by its exposure to MetLife,” Kandarian said.
The price of insurance products would go up if a handful of large life insurers were designated as systemically risky, Kandarian said. That would also reduce insurers’ ability to take on risks and could stop them from offering certain products.
He said MetLife looked forward to working with the FSOC on the best way to “fulfil its obligation” to mitigate risk.
The council, which includes the heads of other financial regulatory agencies, is a relatively new federal body that is testing its powers under the 2010 Dodd-Frank financial reform law for the first time.
Dodd-Frank gave the regulatory council the power to identify potentially risky non-bank firms and regulate them more like banks after a number of non-bank firms struggled during the 2007-2009 financial crisis.
The FSOC generally assesses non-bank financial companies in a three-stage process. In Stage 3, the council contacts each non-bank financial company for further review.
Reporting by Sakthi Prasad in Bangalore; Editing by Paul Tait