MetLife Closer to Spinning Off U.S. Life Insurance Business
June 28 2017 - 3:08PM
Dow Jones News
By Leslie Scism
MetLife Inc. on Wednesday cleared one of the last obstacles to
spinning off most of its longtime core business of selling life
insurance to U.S. families.
Delaware state insurance regulators approved the company's
planned divestiture, which will create a new company called
Brighthouse Financial. The spinoff is expected to strip MetLife of
its bragging rights as the nation's biggest life insurer by assets,
as it is slips behind Prudential Financial Inc. in size.
The new company will start life with about $223 billion in total
assets, about a quarter of MetLife as of March 31, according to
MetLife's regulatory filings. As of March 31, Prudential's assets
totaled $797.4 billion.
Brighthouse is expected to be one of the nation's biggest life
insurers, with 1.3 million life insurance policyholders and 1.5
million annuity owners. MetLife disclosed its plan to spin it off
in early 2016, filed the registration statement in October of last
year and aimed for completion by June 30 of this year. The company
declined to comment on exact timing.
Evercore ISI analyst Thomas Gallagher told clients in a June 23
note that the spinoff could come as early as the end of July or
early August. "However, we would not be surprised if the spin took
place at the end of August or September," he added.
Even with the green light from Delaware, MetLife still needs a
final approval from the Securities and Exchange Commission before
the Brighthouse shares can be issued to MetLife shareholders.
MetLife has yet to file some details of the share distribution, but
Wall Street stock analysts generally expect a launch-of-trading
ceremony at the Nasdaq Stock Market within the next month or
two.
Delaware regulates the unit that is at the heart of Brighthouse,
and the job of approving MetLife's plan belonged to a new insurance
commissioner, Trinidad Navarro, who was elected in November and
inherited a backlog of work. He said in a release Wednesday that
the state's internal and external experts analyzed the transaction
for the last eight months.
"I am satisfied that my department has done a careful and
thorough job," he said in the release.
The Delaware department also has had before it a pending
application for Chinese investment firm China Oceanwide Holdings
Group Co. to acquire mortgage- and long-term-care insurer Genworth
Financial Inc.
Besides life insurance, Brighthouse will be a leading seller of
annuities, which are retirement-income products favored by many
conservative investors. For its part, MetLife will be focused on an
international network of life-insurance businesses as well as group
life-insurance and other benefits sold to employers, and some other
products.
Analysts have said these remaining MetLife businesses have
better growth possibilities than the ones moving into Brighthouse,
and aren't as hurt by low interest rates.
By splitting apart, MetLife could avoid being redesignated as a
"systemically important financial institution" by a panel of
federal regulators, analysts say. Last year, a federal court
rescinded the label in a legal challenge brought by MetLife, and
the matter is now in the hands of a federal appellate court.
MetLife Chief Executive Steven Kandarian has said that the
company doesn't pose a risk to the broader economy, and that extra
regulation would hurt it competitively. Historically, insurers have
been state-regulated.
MetLife's decision to split itself apart coincided with a push
by activist investors for a breakup at insurance conglomerate
American International Group Inc. Advocates of such breakups say
that smaller companies are more nimble and better focused on
product development and other keys to improving sluggish
results.
Brighthouse will sell its products through securities
brokerages, financial advisers and other outside sales forces. Its
chief executive is Eric Steigerwalt, who has been the MetLife
executive vice president in charge of the business that is becoming
Brighthouse.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
June 28, 2017 14:53 ET (18:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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