FSOC - MetLife Designation

Run - Implausible - LIRP - Reputational Risk / Future Shock

  • 2007 - IAA (International Actuarial Association) - Measurement of Liabilities for Insurance Contracts: Current Estimates and Risk Margins, IAA ad hoc Risk Margin Working Group - 170p
    • (p156) - E6.2.3 - The following are some considerations that can affect expected discontinuance assumptions.
      • Most of these factors are portfolio-specific, although some are applicable on an entity-specific or type of products pecific basis, with many the result of contract features, policyholder characteristics, and overall conditions that affect the market or overall industry.
    • The way the contracts were sold and marketed (e.g., a universal life contract sold as low premium term insurance or primarily for investment purposes).
  • 2012 0430 MetLife to FSOC re SIFIs General R-1438_043012_107263_484617996698_1 - 23p
  • 2013 0502 - Meeting Between Federal Reserve Staff and Representatives of MetLife, Inc. (MetLife) May 2, 2013 - 84p
  • 2013 07 - FSOC notified MetLife in July 2013 that it was considering the insurance company for  determination as a SIFI.
  • 2014 12 - FSOC determined MetLife is SIFI
  • 2014 1218 - FSOC/MetLife - Basis For The Financial Stability Oversight Council’s Final Determination Regarding Metlife, Inc - 31p
    • 2014 1218 - Minutes of the Financial Stability Oversight Council - Held December 18, 2014 - 14p
  • 2014 12 - MetLife/Woodall/Hamm - Views of the Council’s Independent Member Having Insurance Expertise - 13p
  • 2016 - IAIS - Compiled Comments on Consultation Document on a proposed updated G-SII Assessment Methodology - 204p
  • 2016 0407 - DOT - Statement from Treasury Secretary Jacob J. Lew On MetLife V. Financial Stability Oversight Council - [link]
    • Earlier today, the district court unsealed its recent opinion rescinding the FSOC’s designation of MetLife.
    • I strongly disagree with the court’s ruling.
      • This decision leaves one of the largest and most highly interconnected financial companies in the world subject to even less oversight than before the financial crisis.
  • 2014 1218 – FSOC/MetLife – Basis for the Financial Stability Oversight Council’s Final Determination Regarding Metlife, Inc – 31p
  • 2014 12 - MetLife/Woodall/Hamm - Views of the Council’s Independent Member Having Insurance Expertise - 13p
  • 2014 1218 - Notice of Final Determination and Statement of the Basis for Financial Stability Oversight Council’s Final Determination Regarding MetLife, Inc. (Dec. 18, 2014) [hereinafter Final Determination] [JA 361–778]. - 361p
  • 2016 - IAIS - Compiled Comments on Consultation Document on a proposed updated G-SII Assessment Methodology - 204p
    • METLIFE: From this perspective, MetLife partnered with Oliver Wyman to develop what we believe is a more effective and transparent approach to determine potential systemic relevance in the insurance sector. MetLife's proposal focusses on Phases II (initial filtering) and III (discovery) of the IAIS Updated Methodology.
    • The principal objectives of our proposal are to (i) provide an explicit link between the indicators and systemic risk transmission channels and (ii) reflect differences in insurer business profiles and risk management practices that affect the systemic 

Mr. HOCKETT. (Edward Cornell Professor of Law, Cornell Law School)

Again, this goes back to something I mentioned in my opening statement, and that is that, again, there was a time when insurance companies were sort of categorically distinct from the other kinds of financial institution.

  • And that is still largely true of many smaller  insurance companies.

But the fact is there are some very large insurance companies that are not traditional insurance companies and that depart in various ways from the traditional insurance company model.

  • That is why I actually mentioned MetLife in my opening testimony just briefly, but I mentioned it in order to note, first, that it was a bank holding company as recently as 2012, that it failed a stress test at that time, and while it has since relinquished its bank holding company status, it nevertheless remains a very large, far-flung, highly complex financial institution.

And indeed, the FSOC and many experts, including terrific business professors at the University of Chicago, at Stanford University, Yale, and elsewhere, and law professors, have noted that its—the term structure of its balance sheet—that is to say the term structure of its liabilities on the one hand and its assets on the other—are not those of the traditional insurance company and, indeed, there can be significant maturity mismatch in as much as some of the policies that MetLife in particular offers can be liquidated quickly.

2015 1119 - GOV (House) - Oversight of the Financial Stability Oversight Council: Due Process And Transparency in Non-Bank SIFI Designations - [PDF-179p]

  • "mass asset liquidation