content_image/229622.jpg
## SIFI Designation and Prudential Regulation 

Last month, MetLife successfully completed the process of deregistering as a bank holding company, which means that we are no longer regulated by the Federal Reserve. However, substantial uncertainty remains on the regulatory front as we face the possibility of being named a non-bank systemically important financial institution (SIFI), which would place us back under Federal Reserve supervision. 

It is difficult to find experts in financial regulation who believe that traditional life insurance activities represent a threat to the financial stability of the United States, and with good reason. Regulated life insurance activities were not responsible for the financial crisis. Perhaps that is why the federal government’s own report on the crisis, the Financial Crisis Inquiry Report, mentions “life insurance” only once in 663 pages. 

The relevant question to ask of MetLife is: Would the failure of our company “threaten the financial stability of the United States”? We believe the answer is no. Not only would we pose no threat to the broader economy, we cannot think of a single firm that would be brought down by its exposure to MetLife. The risk is that the federal government could undermine competition in our industry by imposing a potentially onerous layer of federal regulation on a select few life insurance companies, which are already regulated by the states. A more sensible approach would be to identify and regulate those activities that fueled the financial crisis in the first place. 

Nevertheless, if MetLife is deemed to be systemically important, it is imperative that the final prudential rules be tailored to the life insurance business model, which differs dramatically from that of banks. Naming the nation’s largest life insurers as SIFIs and subjecting them to unmodified bank-style capital and liquidity rules would constrain our ability to issue guarantees. Faced with costly requirements, life insurers would have to raise the price of the products they offer, reduce the amount of risk they take on, or stop offering certain products altogether. At a time when government social safety nets are under increasing pressure and corporate pensions are disappearing, sound public policy should preserve competitively priced financial protection for consumers. 

## Conclusion 

MetLife’s achievements in 2012 raised the bar for our performance in 2013. In light of the economic headwinds and policy uncertainty we face, it is imperative that MetLife stay focused on the swift execution of our strategy. Our goal is simple: build a business that makes us the insurance company of choice for customers and achieve returns in excess of our long-term cost of capital for you, our shareholders. In the modern age, that is how MetLife will demonstrate “more solicitude for the character of its business than for its mere volume .” 

On behalf of the entire MetLife team, thank you for the continued trust you place in us to run your company. Sincerely, 

<img src='content_image/229622.jpg'>

March 15, 2013 

