MET MetLife Inc

By Leslie Scism 

MetLife Inc. President and Chief Executive Steven Kandarian is turning over the reins of the nation's second-biggest life insurer by assets to a top lieutenant, Michel Khalaf, as he sets April 30 for his retirement.

Mr. Khalaf won't take Mr. Kandarian's chairman title, however. In another development, MetLife said it is creating the position of nonexecutive chairman, and the post will be held by its current independent lead director, Glenn Hubbard, dean of the Graduate School of Business at Columbia University.

MetLife had signaled the potential promotion of Mr. Khalaf in June 2017 when he was named president of MetLife's core U.S. business, while retaining his role as president of the company's European, Middle East and African operations. The promotion gave Mr. Khalaf significant additional responsibilities and distanced him from other internal candidates.

Mr. Khalaf, 54 years old, joined MetLife in 2010 through the New York company's acquisition of an international life-insurance business from American International Group Inc. In his 21 years at the AIG unit, he held senior roles around the world, with responsibilities in places including the Caribbean, France, Italy, Egypt, Poland, Romania and the Philippines.

Mr. Kandarian, who turns 67 in March, has been president and CEO since May 2011 and added the title of chairman in January 2012. He joined MetLife in 2005 as its investment chief.

"In Michel, we are fortunate to have a leader who has excelled across a wide range of markets, businesses and cultures," Mr. Hubbard said in prepared remarks. Mr. Hubbard is slated to step down as dean at Columbia June 30.

As Mr. Khalaf took on the extra MetLife duties over the past 18 months, Mr. Kandarian was already beyond the company's customary retirement age of 65. MetLife's board waived its age policy indefinitely in 2016 in a strong show of support for the executive at a critical juncture for the company.

At the time, Mr. Kandarian was divesting a large piece of the company's traditional life-insurance unit, a move that hived off its historic core: selling life insurance and other financial products to individuals and families across the U.S.

Mr. Kandarian also was suing the U.S. government. He was challenging in federal court MetLife's federal designation as a "systemically important financial institution," which made it subject to heightened oversight from the Federal Reserve on top of state insurance-department oversight. His challenge ultimately was successful.

Wells Fargo Securities analyst Elyse Greenspan said in a note that an internal successor was expected because MetLife "has historically promoted from within for top positions." She said the timing seems right because the company had begun to post clean, straightforward quarterly earnings again after the disruption tied to the Brighthouse spinoff. She expects the change "to be seamless."

Another analyst, Thomas Gallagher of Evercore ISI, said that Mr. Khalaf's career has mostly been "in smaller international insurance markets." Still, "while there may be some questions regarding Mr. Khalaf's more limited time spent managing MET's flagship U.S. operations, his expertise in several international markets should help MET's future growth strategy outside of the U.S."

Mr. Gallagher said the four-month transition period is shorter than he expected, especially considering that MetLife has a relatively newly appointed chief financial officer.

The 150-year-old company Mr. Khalaf will take over is a leader in sales of life, dental and other types of insurance sold to employers, and it also offers pension and other retirement products. It has roughly 49,000 employees globally and provides products and services in about 40 countries. Outside the U.S., its largest markets include Chile, Japan, Korea and Mexico.

In hiving off about a quarter of its assets in 2017 to create the company now known as Brighthouse Financial Inc., MetLife lost bragging rights as the biggest U.S. life insurer to Prudential Financial Inc. MetLife now clocks in at about $700 billion in total assets and remains bigger by market capitalization.

Mr. Kandarian's tenure has been bumpy at times. Low U.S. interest rates relative to historical levels have pinched the yields on invested premiums. Those low rates, along with high capital requirements, played into the decision to set up Brighthouse.

The company hit a rough patch in late 2017. Soon after Mr. Khalaf began overseeing the U.S. operations, he learned that MetLife's retirement-income-services unit years ago had failed to adequately search for about 13,500 beneficiaries of private-sector pension plans for which the company had taken on responsibility.

Instead, it designated the people as "permanently unresponsive" after a couple of unanswered letters and booked as profit the money that should have been paid out. Some retirees were owed money from as far back as the 1990s, with amounts averaging less than $150 a month.

Mr. Kandarian publicly apologized about the pension-payments mistake. In December, MetLife agreed to pay a $1 million fine to Massachusetts tied to beneficiaries in its state. Probes including an investigation by the Securities and Exchange Commission are continuing.

Write to Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

January 08, 2019 11:53 ET (16:53 GMT)

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