) unexpectedly dipped 0.8% to $47.21 following its Sep 26
announcement to form a life insurance joint venture (JV) with
Bank for Investment & Development of Vietnam (BIDV) and Bank
for Investment and Development of Vietnam Insurance Corporation
(BIC). The JV is scheduled to be functional in 2014.
Per the agreement, the JV is expected to be armed with a
capital of VND 1.0 trillion ($48 million). Initially, the
operational strategy is devised around providing life and health
insurance products in Vietnam through the JV, 60% of which will
be owned by MetLife. The remaining 40% will be held by BIDV and
MetLife also stands to gain from its participation in the JV,
given an additional agreement for distribution of insurance
products through the bank (or bancassurance) between the JV and
BIDV. The decision of the JV tails from the Memorandum of
Understanding (MoU) signed in Jul 2013.
The JV deal is expected to complement the expansion needs of
MetLife, BIDV and BIC. BIDV and BIC's strong clientele will get a
strong support from the financial reliability and global brand
awareness that MetLife holds. BIDV enjoys an operational network
of over 600 branches across Vietnam.
On the other hand, MetLife's customer-centric business model
should further help it penetrate into emerging economies such as
Vietnam. The global insurance company estimates emerging
economies to contribute about 20% to its earnings by 2016, up
from 14% in 2012. This reflects MetLife's firm conviction of
growth from international operations.
Hence, we believe that the JV with BIDV and BIC in Vietnam
fits well with MetLife's long-term growth strategy. The company's
consistent focus on realigning its business portfolio to cater to
market demand and enhance international growth should drive its
operating leverage going forward.
While MetLife carries a Zacks Rank #3 (Hold), outperformers in
the insurance sector include
American International Group Inc.
Prudential Financial Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
To read this article on Zacks.com click here.