MetLife Won't Seek Capital Injection From Treasury (Update2)
By Andrew Frye
April 13, 2009
April 13 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, said it won't seek funds from the Treasury's Capital Purchase Program after announcing last month it may participate.
The insurer "has already taken actions to reinforce its strong financial position," Chief Executive Officer Robert Henrikson said today in a statement. "MetLife is well positioned, with approximately $5 billion in excess capital."
MetLife is seeking to distinguish itself from rivals including Hartford Financial Services Group Inc. and No. 2 Prudential Financial Inc., which turned to the Treasury after losing money in 2008. New York-based MetLife, which raised $2.3 billion in October selling stock at $26.50 a share, has remained profitable by hedging against market declines.
MetLife gained 20 cents to $28.99 at 5:02 p.m. in late New York trading following the news release. MetLife has dropped 17 percent this year on the New York Stock Exchange compared with the 30 percent slide at Hartford and 4.3 percent drop at Newark, New Jersey-based Prudential.
Banks and savings and loan companies that accepted government funds have bristled under the scrutiny of lawmakers, who criticized firms for their compensation and lending practices. Life insurers are waiting for Treasury's reply after at least 12 requests for aid, some of which came as many as five months ago.
Goldman Sachs Group Inc., the sixth-biggest U.S. bank, said today it's planning to raise $5 billion in a share sale as it seeks to repay Treasury $10 billion the firm received last year.
The federal financial bailout program, originally designed to buy soured loans from banks, has become a tool for the Treasury to bolster firms including credit-card companies and carmakers. The Standard & Poor's Supercomposite Life & Health Insurance Index has declined 26 percent this year, making it more difficult for firms to raise cash from private investors.
MetLife said in its annual report in March that the company was eligible to apply for an investment from the U.S. because it owns a bank. Taking cash from the government would lead to "restrictions on our business," the filing said.
MetLife has benefited from federal aid in the sale of $397.4 million in bonds backed by a guarantee from the Federal Deposit Insurance Corp. in March. The insurer has also sold short-term debt to the government under the federal commercial paper program.
MetLife, one of the top 19 banking institutions in the U.S., is "working closely" with the Federal Reserve in the government's review of balance sheets at the country's biggest lenders, the insurer said in the statement.
U.S. life insurers, which as a group lost $32 billion in surplus in 2008, were instructed by Treasury last year to buy banks or savings-and-loan institutions to qualify for TARP funds. The applications of eligible insurers will be reviewed and funded on "a rolling basis," Treasury said last week.
Life insurers have reported losses and profit declines as the financial crisis pushes down the value of investments backing policies and annuity guarantees. Prudential and Hartford each lost more than $1.7 billion in the second half of 2008, while MetLife's profit exceeded $1.5 billion.
Attempts to reach Henrikson through spokesman Christopher Breslin weren't successful.
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