‘Compelling Evidence’

The largest U.S. life insurer called the label premature and said in a statement earlier today that it has offered “substantial and compelling evidence” it isn’t a systemic risk.

The company demonstrated to regulators “that its insurance and capital markets activities are not of a nature of magnitude that would expose other financial institutions or counterparties to meaningful threat of economic harm in the event of MetLife’s material financial distress,” according to the complaint.

The suit warns that the designation “will inevitably impose significant costs on the company -- and its shareholders and customers.”

The case should take about nine months to a year to resolve, Scalia said this afternoon in a phone briefing with reporters after the suit was filed.

“We respectfully believe that FSOC has things it can learn about how to go about this process better and more effectively,” the attorney said. “It would make sense for them to internalize some of the points that are made here.”

MetLife Chief Executive Officer Steve Kandarian said in an interview earlier that he doesn’t yet know the financial impact of the SIFI designation on MetLife.

Unseen Rules

“I honestly don’t have any way to quantify it at this point,” Kandarian said by phone. “We haven’t seen the capital rules, nor do we know what other prudential standards under Dodd-Frank the Federal Reserve will impose.”

MetLife faulted the government for focusing on its size to the detriment of a more tailored regulatory approach concentrating on specific business activities deemed to be especially risky.

The council “provided no reasoned explanation for failing to pursue an activities-base approach for insurance companies,” Scalia wrote in the complaint.

He argued that “the traditional business of life insurance” doesn’t depend on short term deposits and short term wholesale funding as banks do and thus “are not subject to the ‘run’ risks.”