By John M. Pachkowski, J.D.
Recently, MetLife, Inc. announced that it was considering separating a substantial portion of its U.S. retail segment and currently evaluating structural alternatives for such a separation, including a public offering of shares in an independent, publicly traded company, a spin-off, or a sale. In a press release, the company also noted that it was undertaking preparations to complete the required financial statements and disclosures that would be required for a public offering or spin-off, and that the completion of a transaction taking the U.S. retail segment public would depend on, among other things, the Securities and Exchange Commission filing and review process as well as market conditions.
Once the separation transaction is completed, the new business is to be led by MetLife Executive Vice President Eric Steigerwalt, and the following entities will be included: 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.
Commenting on the separation plans, 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. In the U.S., it would allow us to focus even more intently on our group business, where we have long been the market leader. Globally, we will continue to do business in a mix of mature and emerging markets to drive growth and generate attractive returns.”
Metlife’s separation plans come roughly 13 months after the company was formally designated a nonbank systemically important financial institution (SIFI) by the Financial Stability Oversight Council in December 2014, and about a year since the insurance company filed a federal lawsuit, in January 2015, seeking to have the SIFI label removed.
The announcement of the separation plans is similar to efforts, announced by General Electric Company in April 2015, to sell its subsidiary General Electric Capital Corporation as a means to shed the SIFI designation that FSOC placed on GE Capital in July 2013.
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