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MetLife’s well-diversified EMEA business

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Mar. 3 2015, Updated 4:05 p.m. ET

Diversified exposure

The EMEA region (Europe, Middle East, and Africa) provides insurers with a mix of mature markets and emerging markets. Investors interested in gaining exposure to insurance companies can invest in the SPDR S&P Insurance ETF (KIE).

MetLife’s (MET) operations in the EMEA business segment have exposure to developed markets like Western Europe, where the company is focused on niche segments. MetLife’s EMEA segment also has exposure to emerging markets, such as Central and Eastern Europe (or CEE) and the Middle East.

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Such a geographical mix gave MetLife exposure to a wide array of currencies, particularly the euro, the Polish zloty, and the Russian ruble, which diversifies its foreign exchange exposure. Emerging markets contribute around 80% of earnings in EMEA, including countries like Poland, Russia, Turkey, and Romania.

Alico acquisition

MetLife diversified its operations to EMEA through the acquisition of Alico in 2010 from AIG (AIG). MetLife’s product portfolio in 2013 was well-diversified with life insurance and retirement solutions, contributing more than 40%. Accident and health insurance provided close to 20% of the revenue.

With MetLife’s target of improving the risk profile of its product portfolio, the proportion of accident and health is expected to grow in the future. Between 2011–2013, accident and health products have seen a cumulative annual sales growth rate of more than 30%.

Distribution networks

On a distribution basis, MetLife’s relationships with banks and financial institutions helped gear sales through the banks (36% sales in 2013 and a CAGR of 49% in 2011–13). The agency channel (MetLife and independent) remains important, making up around 40% of total sales.

Investors can invest in insurance companies like MetLife, and its peers like Prudential Financial (PRU) and Principal Financial (PFG) through ETFs like the Financial Select Sector SPDR ETF (XLF).

We have looked at how MetLife is performing in different regions across the globe. In the next article, we will look deeper into the company’s strategy.

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