To provide a better reflection of its global presence, MetLife Inc. (MET) will undergo restructuring of its business segments. As a result, the company will now be divided into three geographical regions – The Americas, Asia and EMEA (Europe, Middle East and Africa). Additionally, MetLife is also creating a new global employees benefits unit.
Earlier, the company was divided into U.S. and International geographical regions. The acquisition of the American Life Insurance Company (ALICO) unit of American International Group Inc. (AIG) in November 2010, amplified the company’s international presence substantially.
The acquisition expanded MetLife’s presence to 64 countries (up from 17 previously), thereby significantly increasing its International revenue share. Revenue at International increased more than three-fold in the third quarter of 2011 to gross $5.1 billion. The out-performance came on the back of robust performance due to the ALICO acquisition, besides growth in Latin America and Japan.
Thus, MetLife’s extended international presence necessitated a likewise increase in its geographical divisions, leading to the restructuring. All three new regions consist of both established and developing markets, thereby providing ample scope for growth.
Moreover, following the restructuring, U.S. and Latin America will come under one segment, The Americas. The declining earnings from the U.S. due to low interest rates will now be compensated by the strong performance of the Latin American business, which is growing rapidly.
Ever since the acquisition of ALICO, MetLife has been strategically realigning its operations and divesting redundant operations. On November 9, 2011, the company approved the sale of its Caribbean operations to Pan-American Life Insurance Group.
Earlier, in July 2011, MetLife announced the sale of its operations in Taiwan and Venezuela and parts of Japan and the UK. The divestitures and alterations are intended to help the company utilize the resources gained from ALICO in the most efficient manner.
MetLife carries a quantitative Zacks #3 Rank, implying a Hold rating for the near term.
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