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MetLife Selling More Equity than Originally Planned for Alico Deal

 By Ben | Published August 03, 2010

American Insurer, MetLife Inc., will have to raise the amount of equity it is selling to finance its purchase of AIG’s international insurance subsidiary, American Life Insurance Company (Alico), which it announced in March.

The sale of Alico to MetLife Inc. for about USD 15.5 billion, comprised of USD 8.7 billion in equity and USD 6.8 billion in cash. MetLife originally planned on purchasing Alico by selling USD 3.1 billion in debt, and USD 2 billion in equity through the sale of shares to help finance the cash portion of the deal. The USD 8.7 billion in equity would have been covered by issuing that value of equity securities to AIG, which would be dependent on minimum holding periods.

However, MetLife announced on Monday that it will issue 75 million shares of common stock to help finance the cash part of the Alico deal, increasing the value of shares sold to USD 3 billion. This 50% increase in value over the originally planned USD 2 billion equity offering, means that MetLife will be spending less cash in hand to finance the deal.

MetLife originally estimated that operating earnings for the year after the purchase would increase by USD 0.45-0.55 per share. After the newest development, estimations have been revised down to a USD 0.40-0.45 increase in operating earnings per share after the purchase of Alico.

Insurance Companies Mentioned:

AIG

AIG logo American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Paris and Tokyo.

Alico

Alico LogoThe American Life Insurance Company, generally known as Alico, provides a broad and innovative range of insurance and savings products to individual customers, corporate clients and high net worth customers. With a wide range of products to support every aspect of their customers’ lives, and provide comprehensive cover for the employees and commercial needs of their business clients. Their products include; health insurance, life insurance, savings plans, accident insurance, retirement planning and travel insurance among others.

MetLife

MetLife LogoPossessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.

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Comments

9 Responses to “MetLife Selling More Equity than Originally Planned for Alico Deal”

  1. Daniel Smith, ISIS Equity Partners, Partner - MarketPlace for Digital Products on August 3rd, 2010 4:43 pm

    [...] MetLife Selling More Equity than Originally Planned for Alico Deal … [...]

  2. MetLife Selling More Equity than Originally Planned for Alico Deal … | Compound Stock Earnings International News on August 3rd, 2010 8:04 pm

    [...] the rest here: MetLife Selling More Equity than Originally Planned for Alico Deal … Posted: 03 Aug, 2010 | No Comments Categories: Uncategorized | Tags: alico, cash, insurer, [...]

  3. Introduction to Investment Banks, Hedge Funds, and Private Equity: The New Paradigm | Investment Review on August 4th, 2010 1:38 pm

    [...] MetLife Selling More Equity than Originally Planned for Alico Deal : International Insurance News [...]

  4. Lump Sum Annuity on August 4th, 2010 3:13 pm

    I have read your article, I have a question for you. We talk about 2 types of Investments 1. ULIP and 2. Mutual Funds.

    When you talk about ULIP, The maintainance Charges ,Morality Charges , Allocation charges come close to 40% of annual PermiumEg.HDFC Pension Plans. Apart from that they charge every year for maintainace.

    When you talk about Mutual Funds One time entrance fee of 2.5%, no annual charges.

  5. MetLife Selling More Equity than Originally Planned for Alico Deal … | Compound Stock Earnings International News on August 7th, 2010 2:50 pm

    [...] more: MetLife Selling More Equity than Originally Planned for Alico Deal … Posted: 03 Aug, 2010 | No Comments Categories: Uncategorized | Tags: alico, cash, insurance, [...]

  6. MetLife Receives Regulatory Approval for Takeover of Hungarian ALICO Subsidiary : International Insurance News on August 9th, 2010 2:07 pm

    [...] approval for transfer of AHICO is part of the deal between AIG and MetLife Inc., which will see MetLife buy AIG’s international life insurance business, American Life Insurance Company (ALICO) for USD 15.5 billion (EUR 11.7 [...]

  7. MetLife Gets Approval for ALICO, DelAm Takeover : International Insurance News on August 30th, 2010 3:17 pm

    [...] MetLife’s purchase of ALICO and associated subsidiaries was agreed upon early in 2010, and the company recently obtained approval to purchase ALICO’s Hungary-based subsidiary, AHICO, from Hungary’s financial markets regulator, PSzÁF, in the beginning of August, 2010. [...]

  8. Insurance commissioner gives OK for AIG’s Alico sale | online car insurance on September 6th, 2010 12:24 pm

    [...] MetLife Selling More Equity than Originally Planned for Alico Deal … [...]

  9. MetLife Selling More Equity than Originally Planned for Alico Deal on May 16th, 2011 5:57 pm

    [...] MetLife Selling More Equity than Originally Planned for Alico Deal [...]

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