Fitch Ratings views the federal court decision to strike down MetLife’s designation as a non-bank systemically important financial institution (SIFI) as having no impact on the ratings assigned to MetLife (senior debt rated ‘A-‘).
MetLife was designated in 2014 by the Financial Stability Oversight Council (FSOC) as a non-bank SIFI, subject to regulation by the Federal Reserve and to enhanced supervision and prudential standards.
The federal court’s decision on 30 March was in response to MetLife’s appeal of the SIFI designation, which argued that the SIFI designation process was flawed.
Fitch said it viewed the SIFI designation as neutral to the ratings assigned to MetLife as details regarding the enhanced supervision and prudential standards, including capital requirements, have been unclear.
While enhanced capital standards can lead to a stronger balance sheet, which can be a ratings positive, the ratings agency said they also can hurt competitiveness, which can be a ratings negative. Fitch therefore views the federal court decision as having no impact on MetLife’s ratings.
Fitch added that it does not expect the court ruling to impact MetLife’s plan to spin-off a substantial portion of its US retail business and, as a result, the ratings on MetLife’s insurance subsidiaries that will be included in the spin-off remain on rating watch negative.