New York-based MetLife is closing in on an acquisition of Alico, a subsidiary of New York-based American International Group Inc., according to published reports.

The Wall Street Journal says MetLife, which is the top U.S.-based life insurer by revenues, is in final talks to acquire Alico, which sells life insurance in 50 countries and has a large footprint in Asia. Current AIG CEO Robert Benmosche previously held the same position at MetLife.

Despite pressure to divest business units in order to help repay taxpayer funds used to keep AIG, Benmosche has stated he intends to extract the highest possible price for AIG assets, and has even floated the idea of initial public offerings for individual business units.

Clark Troy, senior life insurance industry analyst, at Boston-based Aite Group, says the rumored deal would make sense for both parties.

“A MetLife deal for Alico at a $14 billion valuation is clearly a good deal for the US taxpayer,” he says. “Aside from supporting the $9 billion valuation for Alico, it bodes well for a future IPO or acquisition of AIG. Any profit that accrues to legacy AIG strengthens its balance sheet and increases the likelihood that it will be able to make the government whole. It also vindicates Benmosche’s strategy of patient divestiture of strategic AIG assets.”

Given Alico’s strength in Asia, the deal would benefit MetLife efforts in Asia, Troy says.

“Alico is positioned very strongly in life in Japan, complementing MetLife’s top position in variable annuities, and No. 2 position in non-life markets in Japan through its joint venture with Mitsui Sumitomo,” he says. “Alico also has top-five positioning in many of the other 50 plus markets it serves. MetLife would bulk up to catapult into the realm of global giants AXA, Allianz, and Generali. The merger will, however, produce a sea change in the culture of MetLife, which remains dominated by U.S. markets, which produced roughly 85% of MetLife’s estimated top line for 2009 and around 3/4ths of its operating earnings.”

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access