Overview of strategy
MetLife (MET) unveiled its corporate strategy in May 2012. As part of these initiatives, the company outlined its strategic goals to be delivered by 2016. The strategy has four cornerstones:
- refocusing the US business
- building the Global Employee Benefits business
- growing Emerging Markets
- driving toward customer-centricity and a global brand
Improving risk profile
In order to improve the company’s risk profile, MetLife is gearing its product portfolio toward protection-oriented products that require less capital—such as group insurance, accident and health, whole and term life products—from products whose performance is linked to financial markets.
We see an increase in sales of Global, Voluntary, and Worksite Benefits products, which are less capital-intensive products. Variable annuities are being rightsized in the portfolio, and MetLife management expects sales of these products to increase from 2015. In 2013, lower risk businesses comprised 59% of the group’s operating earnings.
MetLife targeted $1 billion in expense savings, which the company is on track to achieve in 2015. Cumulative expense savings in 2014 exceeded $910 million. In its strategy presentation, MetLife outlined that $400 million of those savings will be re-invested in the business to enhance capabilities like analytics, claims processing, and technology.
The other $600 million of expense savings will show a positive impact on the operating earnings of the company.
Investors can invest in insurance companies like MetLife, as well as its peers Prudential Financial (PRU), Aflac (AFL), and Principal Financial (PFG) through ETFs like the Financial Select Sector SPDR ETF (XLF).
In the next article, we’ll look at how MetLife is focusing on the Global Employee Benefits business.