MetLife (NYSE:MET) is the largest insurance company in the US with total assets of over $730 billion as of December 31, 2010. MetLife competes with AIG (NYSE:AIG), The Hartford (NYSE:HIG), Prudential Financial (NYSE:PRU) and New York Life Company. Many view MetLife as primarily a life insurance company selling a variety of products such as variable, universal, whole and term life insurance policies. It recently introduced a new whole life insurance product, MetLife Promise Whole Life, after research by Life Insurance and Market Research Association (LIMRA) revealed that individual life ownership in the US reached 50-year low in 2010, with only 44% of the US households owning individual life insurance. 
We have a price estimate of $39.69 for MetLife’s stock, which is about 15% below its current market price.
Growth in life insurance sales is driven by new products in the market, which cater to the changing needs of the customers. MetLife’s new whole life insurance product provides traditional life insurance coverage and benefits of guaranteed cash value that grows each year. With the number of US uninsured households at a 50-year record high, more companies are coming up with similar products, which may improve sales.
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The challenging part for insurance companies is to provide customers better service and more products without significantly increasing costs. The traditional channel of selling insurance products through agents is also struggling as online and direct sales to customers become a more viable alternative for insurance companies. The distribution of insurance products will continue to broaden as companies look to stimulate growth via new products since the low interest rate environment makes it more difficult to earn returns on fixed income investments, which is often a reliable source of income for insurance companies. 
Industry sales for whole life insurance policies grew 6% in Q3 2010 and 15% in the first nine months of 2010, according to LIMRA.  Whole life insurance represents about 30% of the overall life insurance premium sales, and its sales growth is better than overall individual life insurance sales, which grew by 6% in the first nine months of 2010.
MetLife could gain market share over its competitors
MetLife has the advantage of being the largest life insurer with a strong brand image in the US. It earned its recognition for riding out the financial crisis of 2008 when other industry peers such as AIG accepted bailout loans to continue operations. Apart from this, MetLife has a wide distribution network and enjoys high financial strength ratings by AM Best, Fitch and Moody which should help MetLife win market share over time.
We conservatively estimate that MetLife’s share of the US life and health insurance market will reach nearly 7% by the end of our forecast period, but if continued demand for products like whole life insurance policies help lift market share to above 8%, this would result in 5-6% upside to our price estimate for MetLife’s stock.Notes: