MetLife Completes Merger of Three Life Companies, Offshore Reinsurer to Address Regulatory Issues
November 17, 2014 by Fran Matso Lysiak
NEW YORK – MetLife Inc. said it’s completed the merger of three life insurance companies and a former offshore reinsurance subsidiary, with the merged company renamed MetLife Insurance Co. USA that’s domiciled in Delaware.
The decision was part of the largest U.S. life insurer’s larger effort to de-risk its stock market-linked U.S. variable annuity business. It received regulatory approvals for the merger of MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Co., MetLife Investors Insurance Co. and Exeter Reassurance Co. Ltd.
Exeter is its variable annuity reinsurer (Best’s News Service, May 22, 2013).
At its investor day meeting in May 2013, MetLife said it would merge these subsidiaries to better position it to comply with the derivative collateral requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, address regulatory issues concerning the use of captive reinsurance companies and improve the risk profile and transparency of its variable annuity business.
At the May 2013 investor day, MetLife Chief Financial Officer John Hele said the plan to merge the companies was aimed at creating a larger, well-capitalized U.S. life insurance company (Best’s News Service, May 22, 2013).
In the second quarter, MetLife ranked eighth in sales of variable annuities at $1.6 billion, according to Morningstar. John McCarthy, product manager of annuity solutions at Morningstar, wrote that in continuing a trend, past big three variable annuity issuers, MetLife, as well as Prudential Financial (NYSE:PRU) “are managing sales at levels well-below prior years.” For example, MetLife is selling one-third of what it was two years ago, he wrote (Best’s News Service, Sept. 12, 2014).
MetLife’s decision to move its offshore captive subsidiary back to the United States represents “a step in the right direction,” Benjamin M. Lawsky, superintendent of the New York State Department of Financial Services, said in a statement in May 2013. The department had launched an investigation into the use of captive reinsurers in July 2012 (Best’s News Service, March 21, 2013).
Metropolitan Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior)
On the afternoon of Nov. 17, MetLife Inc.’s (NYSE: MET) stock was trading at $54.54 a share, up 0.02% from the previous close.
