> The decision to hive off the U.S. life insurance operations—into a new company called Brighthouse Financial—happened because of strategic and regulatory reasons. Company officials have said the new company will be small enough to avoid federal designation as “systemically important” and thus should be able to sidestep potentially stiff capital rules.

This is a key paragraph and it should be understood that this is an intended effect of the regulations.

The "Dodd-Frank" bill that was passed in the wake of the financial crisis gave the Federal Reserve new responsibility and authority to regulate "systemically important" financial institutions of any industry. These are the companies that would come to mind when you think "too big too fail." Prior to this bill, the Fed only had authority over commercial banks.

If a company gets designated as "systemically important," it has to meet higher capital ratio requirements and other extra regulatory hurdles. This is to (try to) make it less likely that the company will fail. But it will obviously have an impact on financial performance.

Some companies--like GE and now MetLife--instead choose to downsize their financial operations to get them under the "too big to fail" line.

This has the same effect as if the federal government "broke them up"--but it was accomplished via incentive instead of direct action.

The potential downside is that large companies do have some financial advantages, and foreign companies don't have the same regulatory requirement. (Their U.S. subsidiaries do, but not their business overseas.) Thus, over time we might see capital flow out of the U.S.