CS Credit Suisse Group

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)

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