MassMutual Closes on Acquisition of MetLife US Adviser Force for $165 Million
July 6, 2016 by Marie Suszynski
SPRINGFIELD, Mass. – Massachusetts Mutual Life Insurance Co. said it has completed its acquisition of MetLife’s U.S. retail adviser force, a move a company executive said makes MassMutual a “distribution powerhouse and pacesetter for the industry.”
MassMutual bought MetLife Premier Client Group for a final purchase price of $165 million, net of adjustments.
The deal includes certain MetLife employees who support the Premier Client Group, MetLife’s affiliated broker-dealer, MSI Financial Services Inc. and assets associated with the adviser force, including employee contracts.
As a result of the acquisition, MassMutual increased its network of financial professionals by 60% to more than 9,200, while its sales and advisory offices grew nearly 45% to 2,000. In addition, MetLife’s U.S. retail business will be the developer of annuity products issued by MassMutual.
“Now that we’ve expanded our team to include thousands of new and talented advisers and employees — unwavering in their commitment to help policyowners and customers make better financial decisions — MassMutual has become a distribution powerhouse and pacesetter for the industry,” Michael Fanning, executive vice president of MassMutual U.S., said in a statement.
Through the acquisition, MassMutual is on its way to becoming the No. 1 provider of individual life insurance and whole life insurance in the United States, he said.
In March, Fanning told Best’s News Service it hugely benefits the company to get more advisers in front of clients. Agents operate under an “open architecture”-style of marketing, which will continue. MassMutual sells its products through the system and makes other products available as well (Best’s News Service, March 10, 2016).
He also said MetLife will develop a fixed-rate annuity for MassMutual and will be the product’s exclusive distributor for 10 years.
The acquisition originally had a deal value of $300 million, but Fanning said the final purchase price, net of adjustments, would be lower.
“This acquisition begins the next chapter in our rich heritage, underscored by our 165-year history of helping people and families secure their future and protect the ones they love,” Roger Crandall, chairman, president and chief executive officer of MassMutual, said in the statement. “We are now positioned to help even more policyowners and customers access a portfolio of holistic financial solutions for every phase of life.”
MetLife is expected to see about $250 million in net after-tax run-rate annual savings, the company said in a filing with the U.S. Securities and Exchange Commission earlier this year. In 2016, the company expects to save $100 million (Best’s News Service, Feb. 29, 2016).
MetLife said in January it planned to separate its retail segment from the rest of the company.
In June, MetLife and MassMutual said they agreed to take on $1.6 billion in pension liabilities from Pittsburgh-based professional paint company PPG. The deal is expected to close later this year and will be completed with a combination of cash and assets-in-kind (Best’s News Service, June 29, 2016).
In the early afternoon of July 5, shares of MetLife (NYSE: MET) were trading at $37.82, down 4.23% from the previous close.
Metropolitan Life Insurance Co. has a Best’s Financial Strength Rating of A+ (Superior). Massachusetts Mutual Life Insurance Co. has a current Rating of A++ (Superior).
(By Marie Suszynski, BestWeek Correspondent: Marie.Suszynski@ambest.com)