MetLife intends to drive profitable growth in emerging markets and refocus the US business as part of initiatives to increase shareholder value.
MetLife CEO, chairman and president Steven A. Kandarian and other senior figures announced an array of initiatives aimed at attaining a set of key goals by 2016.
By 2016, MetLife aims to:
- increase its return on equity to 12-14%, up from 10.3% in 2011 driven by higher operating earnings.
- leverage its scale to improve value and achieve $600m in net pre-tax expense savings
- shift its product mix towards protection products and away from more capital-intensive products, in order to generate more predictable operating earnings and cash flows;
- and to boost income from emerging markets to 20% or more of all earnings.
The group intends to use its position and scale as a global insurer to make $1bn in pre-tax efficiency savings by 2016, with $400m being reinvested in capabilities and technology and a further $600m going to improve earnings.
It also hopes that by reducing sales of capital intensive products such as variable annuities, and shifting towards protection products such as accident, health and life insurance, it can gain more predictable earnings to improve its risk profile and increase cash flow.
Kandarian said: “Our strategic focus builds on our strengths, leverages our global footprint and capitalises on trends and opportunities in key markets to drive shareholder value.
We have identified significant opportunities for us to continue our growth in a way that is disciplined, meets consumer needs and will position us to achieve return on equity expansion.”
MetLife has identified four “cornerstone initiatives” that it hopes will help it achieve its stated aims.
In the US, MetLife will focus on growing voluntary and worksite benefits and direct businesses.
To better balance growth, profitability and risk, MetLife will also reduce sales of capital intensive products such as variable annuities, and shifting towards protection products such as accident, health and life insurance.
Meanwhile, in other markets it will use its employee benefits expertise to grow business to grow its global benefits business through multinational and expatriate solutions.
Expanding middle class
In emerging markets, MetLife will focus on the expanding middle class, which it says can drive demand for its products.
Finally, MetLife said it will take a more “customer-centric” approach, with a “better understanding of customers’ needs and expectations” leading to higher organic growth rates, better retention and lower costs.
Kandarian explained: “By operating as a global company and leveraging our scale to create efficiencies, we are building a strong foundation for creating long-term, sustained value for both customers and shareholders.”