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MetLife’s US Retail business becomes a profitable franchise

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Retail products

The annuity and life insurance products are the most important products offered by MetLife in the Retail business segment. MetLife (MET) is undertaking changes in the product suite in order to suit the current needs and move ahead of the market, compared to its peers like Prudential Financial (PRU), Aflac (AFL), and Principal Financial (PFG), as well as insurers in the Financial Select Sector SPDR ETF (XLF).

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Retail annuities

Annuities are retirement-oriented products. Customers who purchase an annuity receive a certain amount, either in a lump sum or in periodic payments to the insurer. The insurer makes periodic payments to the customer after an agreed-upon date until the purchaser’s death.

MetLife made changes to its product portfolio in the Retail Annuities segment to help further growth. The company expects to grow the business at a rate exceeding 50% in 2015, with further growth until 2017 and coupled with lower net outflows.

Retail Life and Other

The Retail Life and Other segment offers life insurance products, mutual funds, individual disability income products, and personal lines property and casualty (or P&C) products. The profitable P&C business is expected to maintain its performance in 2015–2017.

Distribution in Retail

Focus on new products and distribution is expected to improve the performance of the life insurance business. MetLife is focusing on improving distribution margin through adviser productivity, capitalizing on the industry-wide shift toward sales through financial advisers and banking channels.

MetLife is working to develop direct sales channels, which would reduce the share of agent commissions in operating costs. In the above chart, we see the revenue growth in the US Direct Insurance Sales channel.

In the next two articles, we’ll focus on MetLife’s businesses targeting corporate customers.

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