After MetLife decision P&C industry asks, 'should we be worried?'

"While a particular combination of facts, including the performance of non-insurance activities, may trigger a determination of systemic risk for an institution, such a determination does not alter the fact that property and casualty and other traditional insurance activities do not give rise to systemic risk," Gordon added.

However, it is unlikely that any P&C insurer is under scrutiny for such designation. The only non-bank SIFIs now are American International Group (AIG), Prudential Financial, both insurers, and GE Capital.

According to sources, the only insurer being examined under scrutiny for possible designation as a non-bank SIFI is Berkshire Hathaway.

MetLife Plans to Challenge

The MetLife designation is conditional; the FSOC did not disclose the name because the designee has 30 days to file a written challenge to it.

But MetLife immediately confirmed it.

Steven A. Kandarian, MetLife chairman, president and CEO, immediately issued a statement saying the company "strong disagrees" with the decision and said the company is "not ruling out any of the available remedies under Dodd-Frank to contest a SIFI designation."

The ruling, however, was stronger than the FSOC designation of Prudential Financial, which prompted objections from two FSOC members.

In this case, the FSOC said in a statement, the vote was unanimous, "with one member voting present."

The vote to designate AIG, which received a huge bailout from the federal government in 2008 and was under federal control for five years, until 2012, was unanimous.

Prudential Financial's final designation vote was 7-2, with an abstention from the new SEC chairwoman, Mary Jo White.

The abstention in the MetLife case was most likely by S. Roy Woodall, Jr., independent member of the board with insurance expertise. He voted to oppose Pru Financial's designation.

The designation was preliminary, as the FSOC noted, with the company now having 30 days to request a hearing before the FSOC to contest the proposed determination. After any hearing, the FSOC may make a final determination regarding the company.

"As noted in the FSOC's interpretive guidance, the FSOC does not intend to publicly announce the name of any nonbank financial company that is under evaluation before a final determination is made," the statement said.

Kandarian's comment likely confirmed that MetLife plans to challenge the designation.

If denied, under the law, MetLife would have the ability to challenge the designation in court.

At the same time, a decision by the U.S. Circuit Court of Appeals for the District of Columbia, meeting en banc, earlier in the day cast a shadow on the likelihood of MetLife winning a court challenge. That, combined with the lack of "no" votes on the designation will likely play a role in whether MetLife ultimately decides to initiate a court challenge if its appeal is denied.

In its decision, the full court threw out a 2-1 ruling in the Halbig case and ordered a rehearing. That decision reversed an Obama administration regulation that allowed health insurance tax credits under the Affordable Care Act for consumers in all 50 states, whether it was a federal exchange or a state exchange through which the consumer purchased the coverage.

The D.C. Circuit made that decision on the same day a panel of the 4th U.S. Circuit of Appeals upheld the administration based on Chevron, a 1987 decision that gives federal agencies broad authority to interpret their own regulations.

If designated a SIFI, MetLife would be subjected to stricter capital, leverage and liquidity requirements as a result of supervision by the Federal Reserve Board as well as state regulators. It would join American International Group and Prudential Financial as insurance SIFIs if designated. General Electric Capital Corp. is the only other non-bank SIFI.

However, Robin Schoen of Washington Analysis said in an investor note that the "early signals regarding the shape of new capital rules suggest future rules will be manageable."

Moreover, Schoen said, "we do not expect insurers to be subjected to Federal Reserve stress tests – despite being designated as SIFIs – until 2017, at the earliest."

The FSOC acted only two days after seven House members sent a letter to Treasury Secretary Jacob Lew effectively seeking a stay of execution for MetLife.

The letter was written by Rep. Scott Garrett, R-N.J.

The letter argued that the FSOC policy toward insurance companies is to "designate first, then ask questions later." It specifically argued that insurers "didn't get the public analytical effort that the asset management industry did in the FSOCs "rush" to designate firms as SIFIs, leading to disparate treatment of insurers, the congressmen said.

At the same time, Rep. John K. Delaney, D-Md., issued a statement following the MetLife designation expressing concern about the "process behind the designation, particularly regarding the lack of communication and transparency."

The legislation is part of MetLife's year-long, multi-pronged efforts to stymie designation.

Delaney's legislation was introduced July 15. The bill, H.R. 5180, the Financial Stability Oversight Council Improvement Act. He claims it would address concerns in the transparency of the SIFI designation process.

He said it would do so by having the FSOC to "focus on the riskiness of the underlying activities at these entities, including how they are structured and capitalized."

Effectively, such legislation would have the effect of frustrating the ability of the FSOC to designate an institution as SIFI. It would also give the courts, which lack the FSOC expertise, the finally say in determining whether an institution is designated a SIFI.