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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (47037)	3/15/2012 12:14:57 AM
From: Spekulatius	2 Recommendations Read Replies (1) \| Respond to of 78624

re MET - MET's failure is largerly irrelevant, except for the reputational damage. Once they cease to be a bank holding company ( They can change the status once the sale of their bank operation is closed), the FED has no say in what MET can or cannot do. Reading in the aforementioned FED report MET seems to fail the test because of ~11.5B$ of assumed realized losses and 7.9B$ in fair value changes (due to increased spreads) for held for sale loan. So roughly we talk about 21B$ in assumed loan losses, which is pretty substantial relative to the 48B$ in tangible equity that MET currently has. While the FED opinions won't matter, once MET ceases to operate as a bank holding company, the simulated scenario shows that MET (and other insurance companies) are fairly vulnerable and maybe even more vulnerable than banks currently to economic stress. For me, that is the real significance of this test and I think it is important to remember in the future.