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MetLife’s emerging market strategy fostering growth

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Increasing earnings contribution

MetLife’s (MET) strategy aims at growing business franchises in its emerging markets. Currently, the company is exposed to markets in Latin America, Asia, Central and Eastern Europe, the Middle East, and Africa.

MetLife’s strategy includes a 2016 target of sourcing 20% of operating earnings from emerging markets. This has increased to 17% from an earlier 14% contribution. Emerging markets provide MetLife with exposure to underpenetrated markets with a growing middle class.

Other insurers who are also looking at emerging markets for growth include ACE (ACE), AIG (AIG), and Principal Financial (PFG) among the insurers in the Financial Select Sector SPDR ETF (XLF).

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All regions showing growth

In the above chart, we see that between 2011–2013, MetLife’s emerging market businesses saw an 11% cumulative annual growth rate in operating earnings. While EMEA experienced a higher growth rate of 16.1%, Latin American markets still contribute a larger share of ~60% to the operating earnings and displayed a 7% cumulative annual growth rate. In Europe, the Middle East, and Africa (or EMEA), 50% of the operating earnings is contributed by Poland, the Gulf, and Russia. Turkey also witnessed high growth.

Emerging markets in Asia also saw significant growth, where operating earnings grew from -$1 million to $17 million over three years. The contribution of these markets to group level operating profit has yet to scale up, and is expected to be 2% of operating profit in 2014 and 6–9% in 2017. China and India remain focus markets for the company.

In the next section, we’ll see how MetLife is growing exposure to emerging markets through acquisitions.

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