MetLife develops its employee benefits business across the globe
MetLife - Everything investors need to know (Part 10 of 18)
Overview
The Global Employee Benefits, or GEB, aims to capture the growth of employee benefits business across the globe. The growth comes from two primary sources: the increased local demand in various countries, as well as demand from multinational corporate clients.
The goal of the business unit is to share best practices in distribution, pricing and underwriting, capabilities, and product innovations across countries of operation for their local employee benefit businesses in a country. Local employee benefits contribute over 50% of the sales of this unit.
MetLife (MET) also uses this unit to grow business through existing relationships with multinational companies, from one country of operation to another. This subsegment has been the key driver of top-line growth, with ~38% cumulative annual growth rate in 2011–2013.
Growth in focus markets
GEB business units are present in 45 countries, out of which 11 are its focus markets as shown in the chart above. MetLife’s strategy in this unit has been profitable revenue growth.
Sales growth in the focus markets saw 91% cumulative annual growth in developed countries and 26.5% growth in the emerging markets. Product innovations, distribution improvements, and operational efficiencies in these markets drive this growth. Going forward, the company expects double-digit growth in both developed and emerging markets.
Business mix
Latin America is one of the major contributors to MetLife’s business unit, with close to half the revenue. EMEA follows, with a share of revenues of ~40% in 2013. Asia contributed another 13% of the revenues.
Investors can gain exposure insurance companies like MetLife, as well as its peers Prudential Financial (PRU), Aflac (AFL), and Principal Financial (PFG) through ETFs like the Financial Select Sector SPDR ETF (XLF).
We discuss MetLife’s emerging market strategy in the next article.
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