Afterthe anticipated separation of MetLife Inc.'sretail business unit from the parent company, MetLife will tumble from the third-largestglobal insurer, as measured by total assets, to the sixth.

Currently,MetLife has total assets of $942.57 billion, which will sink to $702.57 billionafter the separation, slated for the first half of 2017.

, with$796.49 billion in total assets, would move up a rung from fourth-largestglobal insurer to third-largest. Non-U.S. insurers would move into the topfive: Japan Post Insurance Co.Ltd. and Ping AnInsurance (Group) Co. of China Ltd. would assume the fourth andfifth places globally by asset size, respectively.

MetLifeannounced Oct. 5 insecurities filings how it would spin off its life insurance and annuitybusinesses, with about $240 billion in assets, into a company named BrighthouseFinancial, separating it from the remaining holding company.

Regulatoryand economic considerations prompted the move, which was announced in January.

Atthe time, MetLife was designated as a systemically important financialinstitution by the U.S. Financial Stability Oversight Council, subjecting it toas-yet-undeveloped higher capital standards, liquidity provisions and stresstesting. Although the designation was tossed out March 30 by a District Courtjudge, the federal government is appealing the decision, with oral argumentsscheduled for Oct. 24. If MetLife again prevails in court, theFSOC could initiate a SIFI review of both MetLife and Brighthouse in thefuture, although separately they might not earn a designation as a SIFI.

Internationally,the landscape may be less malleable.

MetLifewas also designated a global systemically important insurer by theInternational Association of Insurance Supervisors in 2013, and remains one. G-SIIs will be subject to higher loss absorbencycapital requirements in groupwide resolution planning and resolvabilityassessments when the IAIS implements its developing standards.

Itis unknown whether MetLife’s reduced size will prompt its removal from thecurrent list of nine G-SIIs once the Brighthouse spinoff is complete.

MetLifeCFO John Hele said the bestway to manage systemic risk is through an activities-based approach, includinglooking at how those activities are carried out and how many players areinvolved in a particular transaction. Supervisors perhaps should not befocusing on the issue of capital when it does not solve systemic risk, he saidduring an international insurance panel discussion Oct. 7 at a meeting of theInstitute of International Finance. It is through scrutinizing activities thatregulators can find gaps in different regulatory regimes, he said.

TheFinancial Stability Board publishes a list of G-SIIs each November,usually, after a review earlier in the year. In 2015, was added to the list and wasremoved.

G-SIIsdo not necessarily include the largest insurers in the world. The IAIS uses aset of criteria and a quantitative as well as qualitative methodology toevaluate insurers and reinsurers as systemic, including factors and indicatorssuch as interconnectedness and asset liquidation measures. Those includecounterparty exposure and the company'sinvolvement in nontraditional and non-insurance products and services. Assetsize is a smaller factor than interconnectedness under IAIS criteria.

"The IAIS may belooking at an insurer's evolving risk profile when assessing its entry and exitfrom the G-SII list," said DeepBanerjee, S&P Global Ratings credit analyst. "MetLife's changes to its risk profile will likely be reviewedby IAIS over the next year. Whether or not the separation of its retailbusiness will change its G-SII designation isn't clear. But, it is worth noting that MetLife willlikely be an IAIG [internationally active insurance group], even if it doesn't have the G-SII designation." An IAIG, sort of a G-SII-light, will be subject to adifferent host of proposed capital standards, which are undergoing fieldtesting and a comment period.

Forexample, PrudentialPlc is a G-SII, although there are larger global insurers that arenot, such as Japan Post, Legal& General Group Plc and now Generali. is aG-SII, and has been in each year'sreview, although it is no longer among the largest global insurers. It may ormay not be on the list to be published in November.

PrudentialPlc owns Jackson National LifeInsurance Co., perennially one of the top sellers of variableannuities in the U.S. Variable annuities were evaluated as nontraditionalinsurance products by the IAIS, criteria that contribute toward systemic riskunder the IAIS evaluation methodology. Under the MetLife separation,Brighthouse Financial will hold the variable annuity business as part of the retailU.S. operations.

TheIAIS declined to comment at this point in the G-SII process, and insteadreferred to its website.