MetLife Inc. MET announced that it will sell its U.S. retail life agency force unit, MetLife Premier Client Group (“MPCG”), to Massachusetts Mutual Life Insurance Company better known as MassMutual. The deal also includes the company’s affiliated broker-dealer, MetLife Securities.
Notably, MPCG has more than 40 local sales and advisory operations and approximately 4,000 advisors across the country. Each broker and advisor of MPCG will be absorbed by MassMutual.
MetLife has also agreed to design certain annuity products that will be sold by MassMutual.
With the sale, the company will separate the distribution and product manufacturing functions in its U.S. retail unit. The axing of the distribution force will allow the U.S. retail unit to focus more on product manufacturing, which remains its core strength, and thereby enjoy greater competitive advantage.
The transaction is expected to close by mid 2016, subject to certain closing conditions including regulatory approval. The purchase price is not material to MassMutual's capital and surplus.
In January, the company had announced that it will shed its U.S. retail unit to meet its high capital requirement that thanks to the SIFI status it received in 2014. The company believes that parting with the U.S. retail life agency force unit would relieve it to some extent of the stringent capital requirement, since it requires a huge capital reserve and places the company at a disadvantageous position when it comes to competing with other players.
MetLife carries a Zacks Rank #4(Sell). Some better-ranked players in the space are Loews Corporation L, The Hartford Financial Services Group, Inc. HIG and Assured Guaranty Ltd. AGO. Each of these stocks carries a Zacks Rank #2 (Buy).
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