(Bloomberg) – MetLife is in talks with Massachusetts Mutual Life Insurance about a possible sale of MetLife Premier Client Group, the company’s U.S. advisor force.
The group targets middle- to upper-income consumers, including executives at small-to-medium-sized businesses executives, according to a regulatory filing. There is no guarantee a transaction will be consummated, New York-based MetLife said Thursday in a statement.
The life insurance giant has been moving to reshape its business to limit government oversight. MetLife CEO Steve Kandarian is weighing the possible sale, spinoff or public offering of a U.S. retail unit after his company was declared by regulators as a systemically important financial institution, a too-big-to-fail designation that can bring tighter capital rules. A separate U.S. proposal for stricter rules on retirement-product sales is pushing some insurers to evaluate whether they keep broker-dealer operations. American International Group said last month it was selling AIG Advisor Group to funds affiliated with Donald Marron’s Lightyear Capital and PSP Investments.
“MET could see some relief from the likely need to alter commission and fee arrangements in response to likely Department of Labor implementation of new fiduciary standards,” Piper Jaffray Cos. analysts led by John Nadel said in a report. “Generally speaking, exiting the career agency, or owned distribution channel, would negate any conflicts, perceived or actual, from being both a manufacturer of product as well as a distributor.” MassMutual would probably be able to cut real estate costs by combining its 5,500 agents with 4,000 from MetLife, Nadel said.
MetLife has been seeking to increase direct sales through the Internet and also offers products through workplaces. The insurer struck a deal in 2013 to sell two broker-dealer affiliates to a firm backed by Lightyear. And Eric Steigerwalt, who was designated to lead the U.S. retail operation slated for separation, has been cutting advisors in recent years.
“We’re not financing advisors who, frankly, were never going to make it in this business,” Steigerwalt said in 2013. “Our productivity is way up and we’re saving a lot of money.”
He sought to push advisers to sell more auto and residential insurance coverage, which is less capital intensive than some retirement products. MetLife plans to keep its property-casualty unit, which sells auto and home insurance.
MetLife recently lost a distribution relationship on some retirement products. A spokesman for Fidelity Investments said Wednesday that it suspended sales of MetLife’s annuities given the “limited information available at this time” about the insurer’s plan to separate a U.S. retail business.