MetLife to Grow Through Alico Acquisition

Posted on Dec 07, 2010 by Sergio Ulloa (G+)

MetLife's purchase of AIG's Alico in November this year is forecast to achieve significant improvements in earnings for the company in 2011. The scope for an increase in business activity was set out at MetLife's annual investor's conference held on the 6th December 2011, with growth primarily expected to be delivered from outside the American insurance market. The New York based insurer MetLife highlighted three key areas for the generation of operating earnings next year following the acquisition of Alico for $16.2 billion. Premiums from US corporate benefits and from international life and international accident and health insurance were expected to be the main sectors for generating earnings of between $5.1 -5.5 billion by the end of the fourth quarter of 2010. However, the insurer predicts that US business operations will experience a decline in earnings in 2011, but remains positive about the acquisition of Alico driving future growth through its presence in global markets. MetLife's purchase of Alico from US rival AIG earlier this year meant that MetLife dramatically increased its presence on the global stage. The acquisition by MetLife meant that the US insurer gained access to Alico's life insurance, retirement planning, wealth management, accident and health insurance products, which are available for both individual customers and corporate clients. In addition to Alico's existing clientele and product range, MetLife gained access to new international markets, providing substantial opportunities for the insurer. Chairman, president & chief executive officer of MetLife C. Robert Henrikson, said: "With our leading positions in the U.S. and our expanded global reach resulting from the acquisition of Alico, we are poised to achieve strong results next year and beyond." In October this year, MetLife reported third quarter net earnings totaling US$286 million compared to a loss of US$650 million for the same period in 2009. While third quarter earnings from MetLife's US operations remained static in 2010, profits from international markets offset these poor returns amounting to global earnings of US$191 million - reflecting a 25 percent increase in operational earnings during the third-quarter period. There were significant improvements in returns from Chile, Korea and Hong Kong operations, along with increases in Europe, the Middle East and India (EMEI) - predominately driven by premium growth in India. MetLife is planning to grow premiums, fees and other revenues by 30 percent in 2011, which will amount to between an estimated US$45.8 billion and US$47 billion. The US insurer also highlights the intention to invest in expanding its international network and to maintain a disciplined approach to business operations to ensure it is able to generate a profit. The Alico deal means that MetLife gained access to Asian, European and Latin American insurance markets cementing the US life insurer's global presence. As the economic tide changes in the wake of the 2007-2008 global credit crisis, multi-national insurers such as MetLife have been re-positioning activities globally to ensure that they have access to emerging markets, which are now providing insurers with new growth opportunities. "We have accomplished a tremendous amount this year, strategically growing our businesses while successfully completing the largest acquisition in this company's history" said C. Robert Henrikson. MetLife is predicting challenging conditions within its USA operations, with the market expecting to remain stagnant during 2011. Also, MetLife is expecting tough times within the Japanese insurance market - which was an Alico stronghold - as the market continues to suffer from difficult trading conditions. However, MetLife are now strategically well placed in the growing emerging markets in the Latin America and Asian regions. The news of a recent free trade agreement (FTA) between the US and South Korea was welcomed by MetLife - who operate in South Korea - as the commitment for both governments will address existing regulatory hindrances the insurer has experienced in this market. MetLife has been present in South Korea for more than 20 years, and in recent times, the country has expanded economically creating an increasing demand for protection products. Metlife is the largest life insurers in the US and, along with international counterparts such as the Prudential, AXA, Zurich and US rival Prudential Financial, has increased its international presence in order to optimize benefits from emerging and developing markets. This is planned to facilitate higher growth returns from new premium business to offset the more challenging times in established outlets. Insurance Company Mentioned: MetLife Possessing 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.