NEW YORK (TheStreet) -- MetLife (MET) shares are flat at $53.30 in early market trading on Tuesday after the U.S. government filed a request to have a lawsuit brought by the insurer seeking to toss out its designation as a financial institution that is "too big to fail" dismissed.
The New York City-based insurance company was given the designation by the Financial Security Oversight Council, which was formed in 2011 as part of the implementation of the Dodd-Frank reform bill, as a financial institution that is systemically important to the health of the American economy.
A company's designation as a "systemically important financial institution" (SIFI) subjects it to increased regulation on the amount of its cash reserves and oversight by the Federal Reserve.
MetLife is the first non-bank to challenge its SIFI designation, according to Reuters. "Far from presenting systemic risk to the U.S. economy, MetLife is a source of financial stability. We strongly disagree with the arguments laid out by the government in its brief and look forward to responding in court next month," the company said in a statement today.
However, regulators contend that the company's business is interconnected to many financial institutions through its capital market activities and insurance products and therefore worthy of a SIFI designation.
"MetLife's numerous disagreements with the Council's analysis and conclusions are meritless," the government said in a filing with the U.S. Department of Justice. "MetLife's complaints, if accepted, would frustrate the express statutory purpose of the Council: to address potential risks to financial stability posed by the distress of certain companies before that distress occurs and poses an imminent, grave threat to the nation's economy."