MetLife (NYSE:MET) recently reported net income of $6.7 billion for the year ended December 31, 2011, which is substantially larger than the $2.7 billion reported in the previous year. MetLife benefited from strong growth in the international markets last year after its acquisition of Alico in November 2010. MetLife is the largest life insurance company in the U.S. and competes with AIG (NYSE:AIG), Hartford Financial (NYSE:HIG), Prudential Financial (NYSE:PRU) and Manulife (NYSE:MFC).
International insurance is the most valuable business for Metlife and constitutes almost 30% of the Trefis price estimate for MetLife’s stock.
The acquisition of Alico from AIG expanded MetLife’s insurance business into more than 60 countries from 17 countries pre-acquisition. Alico is one of the largest insurers in Japan, the world’s second largest life insurance market and also has a presence in some of the fastest growing markets in eastern Europe, the Middle East and Latin America. The acquisition also helped MetLife to widen its distribution network with the addition of 60,000 agents, brokers and other local middlemen.
The company generated more than $7 billion in premiums and fees from its operations in Japan alone in 2011 compared to $550 million earned in 2010. From other international regions, MetLife generated $8.2 billion in premiums and fees in 2011, which is a 65% increase over 2010. The company is also leveraging its Accident & Health insurance capabilities in these regions to drive sales. MetLife’s total sales of Accident & Health, a low capital and high ROE product, increased by 25% in 2011.
We estimate that the international insurance market will increase from $3 trillion in 2011 to $3.9 trillion by the end of our forecast period.
Our price estimate of MetLife’s stock is at $39.25, which is slightly above the current market price.