Acquisitions enabling growth
MetLife (MET) undertook several key acquisitions and joint ventures to increase its scale and global footprint. This strategy has helped the company gain exposure to the fast-growing and underpenetrated emerging markets, where they have managed to develop strong franchises as outlined in the previous article. Let’s look at two key acquisitions of MetLife.
Mass market access through ProVida
MetLife announced acquisition of ProVida from Spanish bank BBVA. The acquisition came with a price tag of around $2 billion, which MetLife arranged from internal funds. The acquisition was expected to bring an increase of 3 percentage points in the contribution of emerging markets to MetLife’s operating earnings. This relates relating directly to its strategy of growing its emerging markets franchises.
ProVida is the largest private pension fund administrator in Chile in terms of assets under management. ProVida is expected to provide avenues for further growth in the region through increased penetration in the high-income segment. ProVida is already well-penetrated in the mass market, its most profitable customer base, through its strong branch network.
MetLife purchased Alico, or American Life Insurance Co., from AIG (AIG) in 2010. The acquisition helped MetLife gain exposure to a large number of emerging economies Alico was already operating, characterized by a growing middle class and underpenetrated insurance markets. These comprised the markets in Latin America, EMEA, and Asia.
Examples of business units performing well after the acquisition include Russia, which saw 25% cumulative annual growth since the acquisition and the Gulf with 15% growth.