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Home . International Insurance News . Asia . MetLife to Acquire ALICO

MetLife to Acquire ALICO

Monday, March 08, 2010

New York, March 8, 2010 – MetLife, Inc. announced today a definitive agreement to acquire one of American International Group, Inc.’s international subsidiaries, American Life Insurance Company (ALICO), for approximately $15.5 billion. The consideration will consist of $6.8 billion in cash and approximately $8.7 billion in MetLife equity securities, subject to closing adjustments.

Specifically, the equity security portion of the purchase price will consist of 78.2 million shares of MetLife common stock valued at $3.0 billion, 6.9 million shares of contingent convertible preferred stock valued at $2.7 billion and 40 million equity units having an aggregate stated value of $3.0 billion. The values of the common stock and the preferred stock are based upon the closing price of MetLife’s common stock on the New York Stock Exchange on Friday, March 5, 2010. Finally, MetLife expects the cash portion of the purchase price to be financed through a combination of the issuances of senior debt and MetLife common stock as well as cash on hand.

The acquisition of ALICO, one of the world’s largest and most diversified international life insurance companies, accelerates MetLife’s global growth strategy. Upon completion of the transaction, MetLife, which is already the largest life insurer in the United States and Mexico, will become a leading competitor in Japan, the world’s second-largest life insurance market. The transaction materially advances MetLife’s position in Europe. It also moves MetLife into a top five market position in many high growth emerging markets in Central and Eastern Europe, the Middle East and Latin America.

“With this acquisition, MetLife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company,” said C. Robert Henrikson, chairman, president and chief executive officer of MetLife, Inc. “Today’s transaction will bring together two profitable, complementary, well-established businesses with superb track records and strong long-term growth potential. We expect it will increase MetLife’s return on equity and be accretive to operating earnings.”

MetLife expects the transaction to increase its 2011 operating earnings per share by approximately $0.45 to $0.55 per share, and enable the company to increase its estimated 2011 year-end operating return on equity by 140 to 160 basis points. Operating earnings per share does not include transition and other one-time expenses estimated at $0.12 per share.

MetLife and AIG will enter into an Investor Rights Agreement which will, among other things, require AIG to hold specified amounts of MetLife securities for certain designated periods of time. Certain lock-ups will begin to expire nine months after closing. The ALICO special purpose vehicle intends to monetize the MetLife securities over time, subject to market conditions, following the lapse of agreed-upon minimum holding periods.

Henrikson added, “This transaction creates a global leader in life insurance and employee benefits by adding significant scale and geographic reach to MetLife’s international footprint and further diversifying the company’s product mix, distribution channels and geographic exposures. We have tremendous respect for the franchise that the ALICO team has built and, to ensure a successful integration, I have asked Bill Toppeta, president of MetLife’s International business, to lead the integration of ALICO into MetLife.”

“MetLife has a proven track record in integrating complex multi-national acquisitions and we look forward to welcoming our new ALICO colleagues,” said William J. Toppeta, president, MetLife’s International business. “Moreover, we are committed to ensuring a smooth transition for ALICO’s customers and distributors, who will benefit by joining a financially strong, industry-leading organization with more than 140 years of experience in providing customers with the products and services they need to protect their financial future.”

Founded in 1921, ALICO is a leading international life insurer that provides consumers and businesses with products and services for life insurance, accident and health insurance, retirement and wealth management solutions. The transaction includes all of ALICO, including the company’s approximately 60,000 points of distribution, including agents, brokers and financial institutions; 12,500 employees across more than 50 countries; and 20 million customers worldwide. The transaction also includes ALICO’s Global Benefits Network serving U.S. and foreign multinationals.

The transaction has been approved by the boards of directors of both MetLife and AIG, and is expected to close by the end of 2010. The transaction is subject to certain regulatory approvals and other customary closing conditions.

Credit Suisse served as principal financial advisor to MetLife. Barclays Capital served as special financial advisor to MetLife. BofA Merrill Lynch, Deutsche Bank and HSBC also served as financial advisors to MetLife. Dewey & LeBoeuf LLP served as principal legal advisor to MetLife.

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MetLife to Acquire ALICO

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