MetLife (NYSE:MET) has extended its distribution partnership with Citigroup (NYSE:C) to market insurance products in 15 markets through 2025.  The insurance company will be able to leverage Citi’s established banking facilities to distribute insurance products. The deal covers Australia, Indonesia, Malaysia, Philippines, Thailand, Argentina, Brazil, Bahrain, Czech Republic, Egypt, Greece, Poland, Russia, Spain, and the UAE. These markets account for 10% of the global premium volume. 
MetLife earns more than 40% of its premiums from outside the U.S. and has operations in high-growth markets in Asia and Latin America. Two thirds of the company’s international premium volume comes from Asia, while 20% comes from Latin America. The main markets for MetLife in these regions include China, Japan, Hong Kong, South Korea, Australia, Brazil, Argentina, Mexico, Chile, Colombia and Uruguay. The company acquired ALICO from AIG (NYSE:AIG) in 2010, which allowed premiums from Asian operations to grow from $1.7 billion in 2010 to $8.3 billion in 2012. Premium volume from Latin America has grown from $2 billion in 2010 to 2.6 billion in 2012. The agreement with Citi will allow MetLife to maintain growth through effective distribution in these geographies. Our $49 price estimate for MetLife’s stock is in line with the current market price.
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Brazil Could Be a Key Market
Brazil stands out from the countries covered in the Citigroup deal; the country observed 21% inflation-adjusted premium volume growth in 2012, accounting for 60% of premiums coming from Latin America.  The middle income class in the country has been growing and will drive premium growth in the coming years. The Gini Index dropped from 57.7 in 2004 to 51.9 in 2012, indicating improved income distribution.  (A Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality) The income share earned by the middle 40% (second and third 20%) of the population has increased from 17% in 2004 to more than 20%.  The country’s population currently stands at just over 200 million, with a median age of 30.3 years.  The population growth rate is relatively low at 0.83% (Brazil ranks 133rd in the world in terms of population growth rate) while the life expectancy is over 73 years, indicating the populace will gradually age in the coming years. The expanding middle class should lead to higher demand for insurance products in the coming years. MetLife is positioning itself to capitalize from this growth.Notes: