MetLife joins General Electric Co.’s finance unit in seeking to simplify operations after being designated by a U.S. panel as a non-bank systemically important financial institution (SIFI), a tag that can lead to stricter limits on the balance sheet.

Read: MetLife takes issue with DOL fiduciary rule

Kandarian has sought to reverse that designation in court.

The retail business, as part of a SIFI, faces “higher capital requirements that could put it at a significant competitive disadvantage,” Kandarian said in the statement. “Even though we are appealing our SIFI designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation.”

Share rebound

MetLife rallied 6.6 percent to $44.76 at 6:28 p.m. in New York on the announcement, which was after the close of regular trading. The company had dropped 13 percent this year through Tuesday’s close after slumping 11 percent in 2015.

MetLife would retain units providing workplace benefits and property-casualty coverage along with the corporate benefit funding division that offers pension and retirement products.

Kandarian’s company also plans to keep operations in Asia, Latin America, Europe the Middle East and Africa.

The retail unit slated for separation is a provider of variable annuities, where results can be tied to fluctuations in stock markets and interest rates. The new company would also include life insurance entities.

MetLife didn’t outline a timetable for the plan, saying the completion of a transaction could depend on market conditions, and also regulatory approvals.

‘Growth prospects’

Breaking off a retail unit would leave MetLife “with a regulated set of businesses, but less heavily regulated than retail products,” David Havens, a debt analyst at Imperial Capital, said in a note. “It should also leave MET with a large international portfolio that has good long-term growth prospects.”

The insurer said Executive Vice President Eric Steigerwalt will lead the new company. He previously ran the domestic retail business and was named in November as interim head of U.S. operations, which added responsibility for segments including group coverage and workplace benefits.

Under a prior management structure, all operations in the Americas were overseen by William Wheeler, the insurer’s former chief financial officer. Wheeler departed last year and became president of Athene Holding Ltd., the insurer with ties to Apollo Global Management LLC.

Maria Morris, executive vice president and head of global employee benefits, was named interim head of the remaining parts of MetLife’s U.S. businesses, according to John Calagna, a spokesman for the company. Oscar Schmidt will continue to lead Latin American operations.

MetLife is among four non-bank companies that were named SIFIs by the Financial Stability Oversight Council.

That panel was created by the 2010 Dodd-Frank law and charged with monitoring potential threats to the financial system after the near collapse in 2008 of companies including insurer American International Group Inc., which required a U.S. bailout.

GE, AIG

GE has been divesting finance operations and has said it will apply to drop its tag as a SIFI.

Prudential Financial Inc., the second-largest U.S. life insurer, in 2013 opted against filing a lawsuit to overturn its SIFI status.

AIG, also a SIFI, has been facing pressure from activist investor Carl Icahn to break up into three separate businesses--one offering property-casualty coverage, another selling life insurance and a third backing mortgages.

Icahn has said the risk tag is intended to be a tax on size and AIG’s businesses would be worth more to shareholders if they’re not part of a systemically important company.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.