MetLife Reorganizes to Improve International Business Opportunities

Posted on Nov 23, 2011 by Sergio Ulloa (G+)

MetLife Inc, the United States' largest life insurance group, has decided to reorganize their business infrastructure in order to better represent the increased role international insurance markets have come to play in contributing towards the company's overall growth and development over the past few years. On Tuesday, New York-based MetLife announced that they would be splitting their business structure from the previous two sub-divisions, with one branch representing only their home US market and another focused on the entire international insurance sector, into three new regional divisions, each tasked with managing distinct geographic areas in which the life insurer is now serving an wider number of customers. According to the company statement, MetLife's three new regional business divisions will be the Americas, EMEA (Europe, the Middle East and Africa) and Asia. The change will enable MetLife's business to more closely match those of its international rivals like AIG and AXA. MetLife also outlined a raft of high-end personnel changes that will accompany this structural overhaul. Each of the company's new regional divisions will have its own president and executive team and this has necessitated considerable movement within the firm. MetLife has appointed William J. Wheeler, who had been their chief financial officer since 2003, to be president of the newly combined Americas division, with Executive Vice President Eric Steigerwalt serving as interim CFO while the company searches for a successor. Michel Khalaf meanwhile was named president of the new EMEA division, stepping up from his previous position as chief executive of MetLife's Middle East, Africa and South Asia region. The company is still searching for a president to run the new Asia division. In the meantime, that region will report directly to MetLife President and CEO Steven A Kandarian, who threw his support behind these new moves. "To reach its full potential, MetLife needs an organizational structure that leverages the best of both MetLife and Alico," CEO Kandarian said in the company statement, adding that "this structure will lay the foundation for a global company. Each of our new regions have both mature and developing markets, both of which are critical to shareholder-value creation. At the same time, they will be able to draw on strengths from across each region to drive collaboration and efficiencies." MetLife's reconfiguration eliminates some of the company's previous executive positions. MetLife will no longer have a president solely representing their U.S. business, with the previous head, William J. Mullaney, now moving on to other opportunities. Meanwhile the man who served previously as president of the company's international business sector and was integral to the Alico acquisition, William Toppeta, has plans to retire. Toppeta will remain with MetLife as the vice chair and advisor for the EMEA and Asia regions through May 31, 2012. In addition to these moves, MetLife plans to move executive vice president Maria R Morris to head the global employee benefits business unit, while Marty Lippert will lead global technology and operations division. All of these moves are following a productive year for MetLife, one which has seen the company expand their global footprint and operating scale significantly to offset the tepid performance of their home US market. The New York based insurer reported in October that net income for the third quarter reporting period had grown by more than tenfold year-on-year, beating market analyst estimations on the back of substantial derivative gains, increased investment income and the continued expansion of its international sales division from its purchase of Alico from AIG last year. Cumulatively, for the three months ending September 30, MetLife earned US$3.55 billion, a significant improvement on the US$286 million earned for the same quarter in 2010. Total third quarter revenues meanwhile were US$20.5 billion, up from US$12.3 billion in the corresponding period a year ago. In the past 12 months MetLife has earned roughly US$5.6 billion. MetLife has credited much of their success so far this year to their Alico acquisition and expect the new assets to contribute significantly to their bottom line going forward. MetLife's investment portfolio had risen from US$383.2 billion to US$493.2 billion by the end of the third quarter 2011. The US life insurance giant had long been looking to develop its global reach and distribution platform, and in 2010 the company was able to purchase American Life Insurance Company (ALICO) from a struggling AIG for US$16.4 billion to accomplish this. The acquisition of Alico, who operates out of more than 50 countries, has provided MetLife with meaningful new sources of diversified earnings through their access to new Asia Pacific, European, Middle Eastern and Latin American insurance markets. In the most recent quarterly statement, MetLife's international segment noted that operating earnings had already risen to US$578 million from the US$189 million reported last year. MetLife's international business has expanded in concurrence with a waning performance in the US, gradually overall approaching earnings parity between the two segments, and this has necessitated the firm's global restructuring effort, which will target all the markets where sustainable premium growth is feasible more equally. Through the third quarter 2011, operating earnings in Metlife's home US market fell by 23 percent, to US$655 million, due to increased insurance reserves, persistently low interest rates and overall flagging consumer confidence. According to some industry observers, MetLife's business in the US could in fact improve through this reorganization. By bundling US insurance business together with Latin America's, an under-penetrated and populous region targeted for growth, MetLife may find itself able to equalize mature market weaknesses in the short-to-medium term and maintain it's margins effectively until the global economy recovers. Overall, multinational insurers such as AIG, AXA and MetLife need to find value in re-positioning their activities to ensure that they have access to the emerging protection markets that are now providing all insurers with the most profound earnings growth opportunities. Insurance Company Mentioned MetLife MetLife is the largest life insurance company in the United States, with total assets of US$785 billion and over US$4.2 trillion of life insurance in force. 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.