Quicker Option
The announcement could eventually allow MetLife to resume share repurchases. Kandarian said in January that he would pursue an exit of Brighthouse and then announced the next month that buybacks would be on hold until the board decided which separation path to pursue.
Spinning off the unit may also be the quickest option, RBC Capital Markets analysts led by Eric Berg said Aug. 24 in a note.
“A spin would get the majority of the highly capital-markets-sensitive, and therefore volatile, retail business off of Met’s books a lot sooner than would an IPO,” the analysts said.
Court Clash
Kandarian is seeking to simplify MetLife and limit regulatory oversight, announcing a deal in February to sell an adviser network to Massachusetts Mutual Life Insurance Co. ahead of new, stricter rules on pitching some retirement products to consumers. He won a court ruling the next month that overturned the government’s designation of MetLife as too big to fail, a tag that could come with stricter capital requirements. The U.S. is appealing the decision.
Kandarian’s company will remain the largest provider of employee benefits in the U.S. and a major insurer in markets including Japan and Latin America, according to the statement.
“Today’s filing marks an important milestone for both MetLife and Brighthouse,” he said in the statement. “The separation will enable both companies to compete more effectively.”
MetLife had slumped 4.6 percent since Dec. 31 through Wednesday’s close in New York trading. The company slipped 11 percent last year and was little changed in 2014.
Kandarian’s insurer intends to retain the licensing agreement for Peanuts characters such as Snoopy and to keep the MetLife name on the football stadium used by the New York Jets and New York Giants, said a spokeswoman for the insurer, reiterating prior remarks. She said the company periodically reevaluates marketing relationships.