METLIFE
Spinoff of Chunk of U.S. Life Unit Slated
MetLife Inc. is opting for a spinoff to existing shareholders as
it divests itself of a big chunk of its U.S. life-insurance
business, resolving one of the questions about its plan to shrink
for regulatory and strategic reasons.
The plans, filed with the Securities and Exchange Commission,
put in motion the spinoff of operations representing about a fifth
of the company's most recent annual earnings. The company announced
this summer the new company will be known as Brighthouse
Financial.
The filing doesn't preclude a switch in coming months to an
initial public offering, analysts said.
MetLife, with $942.6 billion in assets as of June 30, will slip
to second biggest after the split, behind Prudential Financial
Inc., at $796.5 billion in total assets.
In announcing the jettisoning in January, MetLife had left open
the possibility of a sale. But Wall Street analysts largely
discounted that because of a paucity of buyers for a unit as large
as the one being divested.
--Leslie Scism
REGULATION
Credit Suisse to Pay Penalty on Disclosure
Credit Suisse AG agreed to pay $90 million to U.S. regulators
after admitting it misrepresented in securities filings how it
determined a key performance metric used by investors.
The Swiss bank entered into a civil settlement with the
Securities and Exchange Commission and admitted that it padded the
number for its private bank.
According to the SEC, the bank's process for calculating net new
assets in its wealth-management business was sometimes inconsistent
with its disclosures to investors and regulators.
A lawyer for Credit Suisse didn't respond to a request for
comment.
The SEC also fined a former Credit Suisse Executive, Rolf Bögli,
$80,000 for his alleged role in the scheme. Mr. Bögli's served as
the chief operating officer of the firm's private-banking division
and neither admitted nor denied the allegations.
"Rolf Bögli has reached a settlement with the SEC and he looks
forward to moving on," Mr. Bögli's lawyer, Kenneth Breen, said. he
SEC said that between 2011 and 2012 Credit Suisse disclosed in
securities filings that it calculated net new assets under
management, or NNA, on an individual basis for each client based on
the client's intentions and objectives. NNA measures the flow of
new business to Credit Suisse's private bank, and is a key metric
used to asses the health of the bank's wealth management
business.
According to the SEC, some bank managers at Credit Suisse
sometimes calculated net new assets under management to include
investor funds that weren't under active management. Some bank
managers, including Mr. Bögli, pressured employees to do this
against their will, the SEC said.
Throughout 2012, Credit Suisse struggled to meet its NNA
targets, according to the SEC.
In emails contained in the SEC order, Mr. Bögli pushed his
employees to reclassify the assets of high net worth clients. In a
January 2013 email, Mr. Bögli invoked senior executives at Credit
Suisse's Private Bank, writing to subordinates that the
executives"want[ed] to get as close as possible to 5 billion" in
NNA. Mr. Bögli wrote, "we need another billion," in NNA and then
asked, "can we move [Client A] in that direction?" According to the
SEC, that meant improperly re-classifying that client's assets.
Credit Suisse admitted to the allegations in an internal, SEC
administrative proceeding and agreed to a cease-and-desist order in
addition to the financial penalty. Credit Suisse cooperated with
SEC's investigation and voluntarily updated its disclosures about
NNA, the regulators said.
--Christopher M. Matthews
DEAL MAKING
Japan's Sompo Expands Abroad
Casualty insurer Sompo Holdings Inc. said it would buy
property-and-casualty insurance provider Endurance Specialty
Holdings Ltd. for $6.3 billion, the latest deal by Japanese
insurers looking overseas for growth.
"Through this acquisition, we will obtain a solid foundation in
the U.S., the biggest insurance market," Kengo Sakurada, Sompo's
chief executive, said.
Mr. Sakurada also said Bermuda-based Endurance's strength in
specialty products such as crop and cyberattack insurance could
give Sompo opportunities for further growth in Japan.
Although Chinese companies have drawn more attention with deals
such as Anbang Insurance Group Co.'s agreement to buy U.S. insurer
Fidelity & Guaranty Life for $1.57 billion last year, Japanese
insurers have led the charge in terms of total value. Wednesday's
deal is the second-largest by a Japanese insurer after Tokio Marine
Holdings Inc. bought U.S.-based HCC Insurance Holdings Inc. for
$7.5 billion last year. Sompo said it expected overseas operations
to account for more than a quarter of its profit after the
acquisition.
--Atsuko Fukase, Julie Steinberg
1MDB PROBES
Swiss Say Malaysia Lags on Assistance
Swiss authorities said they are trying to advance an
investigation into the alleged misappropriation of billions of
dollars from a Malaysian state investment fund but haven't received
help from their Malaysian counterparts.
Switzerland's Office of the Attorney General said its probe,
begun in August last year, had uncovered an alleged "Ponzi scheme"
at the fund, 1Malaysia Development Bhd., or 1MDB.
The office said it recently made an additional request for legal
assistance from Malaysia. An earlier request for help, transmitted
in January, is "still pending," the statement said. A spokesman for
Malaysia's attorney general couldn't be reached.
The 1MDB scandal is the focus of investigations in several
countries.
--John Letzing
(END) Dow Jones Newswires
October 06, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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