January 22, 2021

MetLife said to start process to sell P&C business – Inside P&C (NYSE:MET)

MetLife (MET +1.8%) reportedly started a sale process for its P&C business with a potential price of $3B-$4B, a price that “seems reasonable for a personal lines business with a solid track record,” say KBW analysts Ryan Krueger and Meyer Shields in a note released late Thursday.

Refers to article in Inside P&C.

The KBW analysts note that the business “never seemed like a complete strategic fit despite MET’s worksite distribution efforts.”

They see Berkshire Hathaway (BRK.A +1.3%) (BRK.B +1.0%), Travelers (TRV +0.4%), and Hartford (HIG +0.7%) as potential acquirers.

Allstate’s (ALL -0.2%) pending acquisition of National General “probably precludes another major deal,” they wrote.

Among non-publicly traded companies, State Farm, Liberty Mutual, Farmers, Nationwide, and American Family could be interested.

Regarding a potential sale’s effect on MET: “Assuming a $3.5B sale price, $3.2B of after-tax proceeds, $2B-$3B of incremental share repurchase, we estimate 5-20c of full-year run-rate EPS accretion or +1-3%, all else equal.”

At the KBW Virtual Insurance Conference on Sept. 10, MetLife President and CEO said the company continues to look at its portfolio “through the lens of strategic fit.”

All options, including divestiture, are on the table if businesses don’t achieve or exceeds a minimum risk-adjusted hurdle rate “within a reasonable timeframe,” he said.

The KBW note points out that from 2015-2019, MET’s P&C business produced an average GAAP operating ROE of 13% and a combined ratio of 97%; operating earnings fell to $249M in 2019 from $344M in 2018.

MetLife’s P&C results for Q2 2020:

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