MetLife targets robust growth with new 5-year plan
Shares of MetLife Inc (NYSE:MET). experienced a 1% uplift following the announcement of ambitious financial targets under its New Frontier strategic plan. The insurer is set on achieving double-digit growth in adjusted earnings per share and a 15-17% adjusted return on equity. Additionally, MetLife aims to lower its direct expense ratio by 100 basis points, all while projecting a $25 billion free cash flow.
The New Frontier strategy, revealed to shareholders on Thursday, builds upon the resilience gained from MetLife’s previous five-year plan. Michel Khalaf, the company’s Chief Executive, emphasized the shift towards a more aggressive growth strategy, focusing on playing “more offense” compared to the past years. Khalaf, who became CEO in May 2019 and is approaching his 15-year anniversary with MetLife, reflected on the challenges faced during the tenure of the previous strategic plan, which included the global pandemic and instability in the U.S. banking and real estate sectors.
Despite these hurdles, MetLife’s stock has seen a 63% increase since the end of 2019, although it lagged behind the S&P insurance index’s 85% rise in the same timeframe.
The New Frontier plan targets growth across four key areas of the business. This includes expanding the group benefits insurance sector for employers and increasing its presence in international markets like Latin America and Asia. MetLife also intends to accelerate its asset management business and enhance its retirement plans offerings.
As part of these efforts, MetLife announced a partnership to launch Chariot Reinsurance with General Atlantic, set to debut in the first half of 2025. This venture, also supported by Chubb (NYSE:CB) and other institutional investors, will leverage third-party capital to pursue growth opportunities beyond what MetLife could achieve with its own balance sheet.
Khalaf highlighted the importance of growing the asset management unit, noting the necessity of scale in the business and MetLife’s comprehensive expertise in alternative investments, including private capital, fixed income, and real estate. While organic growth is the primary focus, the company remains open to strategic acquisitions that would enhance its current operations.
MetLife’s strategy comes at a time when the insurance and alternative asset management sectors are increasingly converging. However, Khalaf pointed out that MetLife’s unique value proposition sets it apart from alternative money managers, offering growth, attractive returns, and lower risk.
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