MetLife Said to Consider Selling Variable Annuity Book

On Feb. 11, Reuters reported that MetLife is exploring divesting its U.S. variable annuity book, which is a subset of its $58 billion annuity book. This mirrors similar moves in the industry such as Prudential’s deal in September to sell a $31 billion book of variable annuities in a $2.2 billion transaction. While we appreciate the logic of selling the variable annuity book, which will free up capital to pursue growth opportunities, we believe it is important that the growth opportunities come at a reasonable price. We note that Prudential recently took a write-down on its acquisition of Assurance IQ. With no deal certainty and a deal likely to only be a fraction of the firm’s market capitalization, we are maintaining our no-moat rating and $52 fair value estimate for MetLife.