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Insurance giant MetLife has won its battle with the government to shed its “too big to fail” designation, the New York Times DealBook blog reported yesterday. A federal judge in Washington, D.C., yesterday rescinded the government’s designation of MetLife as a “systemically important financial institution,” a label that the insurer has been fighting to remove since 2014 because of the extra regulatory scrutiny it brings. The government can appeal the decision. The judge’s opinion was sealed, making it unclear what arguments persuaded the court to decide in favor of MetLife. Even before the ruling, however, MetLife was working to streamline its operations. In January, it announced it was exploring the sale or spinoff of its retail life and annuity business, including a possible initial public offering to create a company that could compete more aggressively with smaller life insurance providers. In February, it agreed to sell its retail adviser network, with 4,000 advisers, to the Massachusetts Mutual Life Insurance Company.

A failed effort to find a buyer has roiled the bankruptcy of Molycorp Inc., a rare-earths company that is pursuing a plan that will make it largely the property of Oaktree Capital Group LLC, the Denver Post reported today. After scrapping an auction because of a lack of acceptable bids, Greenwood Village, Colo.-based Molycorp is trying to get out of bankruptcy reorganized around one line of business, Neo, with the fate of another still up in the air. Bondholders are saying that Molycorp wrongly rejected their bid for the Mountain Pass facility, the only bid that came in for a line of business Molycorp spent $1.7 billion to establish. Molycorp filed for chapter 11 protection in June 2015, its balance sheet rendered unworkable due to a switch in Chinese trade policy that sent the prices of rare earth's diving. Shareholders sued, and hoped to collect against Molycorp's officers and directors liability insurance. The settlement instead lets Molycorp's leaders and its insurance company off the hook in exchange for some money for unsecured creditors. Molycorp, Oaktree and unsecured creditors say the settlement was the best way out of a morass of arguments that marked the Chapter 11 proceeding. Bondholders left out of the negotiations say the deal is bad and that they will challenge it when Molycorp's bankruptcy exit plan is presented for confirmation. Read more. 

Learn more about D&O insurance policies in bankruptcy as a panel of experts tackle this important topic at ABI’s Annual Spring Meeting. Register today. 

The U.S. Financial Stability Oversight Council voted yesterday not to rescind insurance company MetLife's designation for tougher oversight by the Federal Reserve, Reuters reported. MetLife, the country's largest life insurer, received the high-risk tag in 2014 when the heads of the major U.S. financial regulatory agencies determined that a collapse of the company could devastate the U.S. financial system. The council's vote followed its annual review of MetLife's designation.

A federal judge raised tough questions yesterday over regulators’ decision to designate the insurer MetLife as “systemically important” to the financial system, the New York Times reported today. U.S. District Judge Rosemary Collyer focused on how a body of regulators, known as the Financial Stability Oversight Council, made its decisions about companies that could harm the economy, as well as whether regulators followed their own guidelines in the MetLife case. MetLife sued the government in January 2015 after regulators determined the insurer was a “systemically important financial institution,” that could damage the entire economy in times of distress. The company is being represented by Eugene Scalia, a partner at the law firm Gibson, Dunn & Crutcher and the son of Justice Antonin Scalia.

The insurance giant American International Group today announced a series of changes designed to streamline its sprawling operations, but stopped short of acceding to demands that it break up, the New York Times reported today. The company said that it would spin off 19.9 percent of United Guaranty, its mortgage guaranty business, sell its financial advisory business and create nine distinct operating units in its commercial and consumer divisions. The moves are intended to shore up financial performance and give AIG the flexibility to separate or sell businesses down the road. While the company is not ruling out more radical changes, “now is not the time to be shortsighted and simply react to the demands of those who challenge us,” AIG’s president and chief executive, Peter Hancock, said in a memorandum to employees today.

American International Group Inc. said that four of its 15 most-senior executives are departing, continuing an effort by Chief Executive Peter Hancock to realign duties and cut costs as the insurer faces pressure from big investors to improve profitability, the Wall Street Journal reported today. The departures will shrink an advisory committee of high-ranking executives that Hancock formed shortly after taking over as CEO in September 2014. It will become a 10-member team, down from 15. The shake-up is part of a broader plan, unveiled last month, to cut up to 23 percent of AIG’s senior management, or as many as 320 positions. The revamping is aimed at making AIG less complex, more efficient and able to make decisions faster, AIG said in a news release.

A dispute over whether Deloitte & Touche LLP should be held liable for Florida’s biggest-ever insurance-company collapse is headed toward its conclusion in a Tallahassee, Fla., courtroom, the Wall Street Journal reported on Friday. The Florida Department of Financial Services is suing the Big Four accounting firm, claiming that Deloitte was negligent in its audits for a trio of insurance companies that had to be taken over by the state after a string of hurricanes hit Florida a decade ago. The state is seeking up to $850 million in damages. Deloitte denies the regulators’ allegations.