MetLife Surges Following Plans To Separate Its U.S. Retail Business
MetLife disclosed on Tuesday its Board of Directors is currently evaluating strategic alternatives for its U.S. retail segment, including a separation of the unit, a spin-off, or an entire sale.
MetLife plans to include the following entities in the new company: MetLife Insurance Company USA, General American Life Insurance Company, Metropolitan Tower Life Insurance Company and several subsidiaries that have reinsured risks underwritten by MetLife Insurance Company USA.
The new entity would hold approximately $240 billion of total assets and represent approximately 20 percent of the operating earnings of MetLife and 50 percent of the operating earnings of MetLife's U.S. retail segment.
Shares traded recently at $45.50, up 8.3 percent in the pre-market session.
Steven A. Kandarian, MetLife chairman, president and CEO, said, "At MetLife our goal is to create long-term value for our shareholders and deliver exceptional customer experiences. As a result of our Accelerating Value strategic initiative, MetLife has been evaluating opportunities to increase sustainable cash generation and is directing capital to businesses where we can achieve a clear competitive advantage and deliver a differentiated value proposition for customers.
"This analysis considers the regulatory and economic environment in each market where we do business. We have concluded that an independent new company would be able to compete more effectively and generate stronger returns for shareholders. Currently, U.S. Retail is part of a Systemically Important Financial Institution (SIFI) and risks higher capital requirements that could put it at a significant competitive disadvantage. Even though we are appealing our SIFI designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation of the business. An independent company would benefit from greater focus, more flexibility in products and operations, and a reduced capital and compliance burden."
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.