MetLife’s acquisition of Alico from AIG a year ago was
the biggest deal in its 143-year history. It has also transformed
MetLife into a major global life insurer, a strength it intends to
capitalise on through a radical restructuring into three
stand-alone business regions spanning 61 countries.
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MetLife’s acquisition of Alico from American International Group
(AIG) in November 2010 for $16.4bn catapulted it from being not
only the US’ largest life insurer but also the world’s largest
multi-national insurer in terms of life insurance premium
income.
In recognition of this sea change,
MetLife has embarked on a radical restructuring centred on creation
of three new business regions: the Americas, Europe, Asia, and the
Middle East and Africa (EMEA). Each region will be headed by its
own president.
As an indication of MetLife’s
globalisation, its non-US operations contributed 41.7% of its
operating earnings in the first nine months of 2011. This was up
from 20% in 2010 and 7% in 2005.
Based on premiums, fees and other
revenue, international operations now contribute about 30% of the
group total, up from 16% in 2010 and 11% in 2005. In the first nine
months of 2011, MetLife reported total operating earnings available
to ordinary shareholders of $3.93bn.
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By GlobalData
Commenting on the restructuring,
MetLife CEO, president and chairman-elect Steven A Kandarian says:
“To reach its full potential, MetLife needs an organisational
structure that leverages the best of both MetLife and Alico.”
Appointed as the president of the
Americas division is William J Wheeler, who has served as MetLife’s
chief financial officer (CFO) since 2003. Prior to becoming CFO,
Wheeler oversaw business development, product management and
marketing activities for MetLife’s former individual business
division.
The president of MetLife’s now
defunct US business division William J Mullaney is to leave the
insurer after 29 years of service.
The America’s division is MetLife’s
largest, encompassing US and Latin American operations and
contributing about two thirds of total group operating
earnings.
Although the US dominates at about
85% of the division’s operating income, Latin America is of
particular significance being MetLife’s largest developing market
region.
According to MetLife, Latin America
contributed 51% of operating earnings of international operations
excluding Japan in the second quarter of 2011. On an annualised
basis this equates to about $540m or some 10% of total group
operating earnings.
The biggest player in the Latin
American life insurance market MetLife has operations in eight
countries including Brazil, Chile, Mexico and Argentina as well as
in the Caribbean region.
In 2010, MetLife reported gross
premium income of $4.326bn in Latin America, way ahead of its
nearest rivals, Brazil-based Bradesco ($1.64bn), Mexico-based Grupo
Nacional Provincial ($1.60bn) and Mexico-based Seguros BBVA Bancome
($1.57bn).
Heading the EMEA division is Michel
Khalaf who joined MetLife through the Alico acquisition after which
he served as executive vice-president and CEO of MetLife’s Middle
East, Africa and South Asia region. Prior to the Alico deal he was
deputy president and chief operating officer of Philamlife, AIG’s
operating company in the Philippines.
In terms of the EMEA division’s
operating income, European operations are the most significant.
They include units in developed markets such as the UK, Ireland,
Italy, France and Belgium as well as extensive operations in
developing markets including Poland, Russia, Czech Republic,
Hungary and Turkey. European operations generate about 5% of total
group operating earnings.
While Middle East operations are
comparatively small, contributing just under 2% of group operating
income, MetLife is the largest life insurer in the region where it
has operations in countries including Saudi Arabia, the United Arab
Emirates, Egypt, Bahrain and Lebanon.
Metlife’s operations in the region
generated total gross premium income of $583m in 2010, well ahead
of their nearest rivals, Turkey-based Anadolu Hayat Emeklilik
($334m), Axa ($264m) and Turkey-based Basak Groupama
Emeklilik($227m).
MetLife is conducting a search for
a president of its Asia division, which includes operations in
Japan, Australia, Korea, China, India and Hong Kong.
By far the largest contributor,
Japan generated operating earnings of $850m in the first three
quarters of 2011, 21.7% of the group total. Other Asian operations
contribute a total of about 4% of group operating income.
In addition to establishing three
global divisions, MetLife has also created a global employee
benefits business unit.
This will be headed by MetLife
executive vice-president Maria R Morris. Morris has led the Alico
integration and in prior roles has headed group insurance,
retirement and voluntary benefit sales and service operations, and
has run the group and individual disability and dental
businesses.
Summing up the sweeping changes, Kandarian concludes: “This
structure will lay the foundation for a global company.”
