MetLife Scaling Down on Variable Annuities

Over the next four years, MetLife has plans to lower their expenses by $600 million.  The Trefis Team highlights some of the changes MetLife will make in “MetLife Updates: Cutting Back On Variable Annuities While Looking For Growth Abroad.”  By selling fewer variable annuities, they will have less capital tied up, one way to lower expenses.  They also plan to up their return on equity by 14% by adding accident and health products.

The risk that insurance companies take on offering variable annuities has caused some insurers to stop selling the annuity products recently.  MetLife was the top variable annuity seller last year, with $4.93 billion in sales.  Their changing strategies led to a 13% decrease in variable annuity sales in the first quarter of this year, but MetLife is not planning to leave the variable annuity market and knows the importance of annuities for retirement planning.  Approximately 10% of their stock price comes from their annuities.

Through the use of advanced technology, MetLife hopes to eventually lower expenses and become a major player in the life and health insurance marketplace.  They will be selling life insurance online through a direct sales business platform.  Another change to MetLife’s focus will be an increased interest in emerging markets like Brazil, China, Russia, and Turkey.  Much of MetLife’s annuity and insurance business comes from middle class consumers and as the middle class grows in these emerging markets, that is where MetLife wants to invest some more focus.

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