) has entered the credit card insurance market through its
partnership with Citigroup (
). The company has launched a credit card account insurance product
which will provide coverage for unemployment, disability and death.
MetLife is the largest insurance company in the U.S. and this new
product line will add to its extensive portfolio of insurance
products, retirement plans and annuities. The company competes with
other insurance providers like AIG (
), Hartford Financial (
) and Prudential Financial (NYSE:PRU).
We have a price estimate of
$49 on MetLife's stock
, implying a premium of about 20% over the current market
How Credit Card Insurance Works
Like any other insurance policy, the owner of the credit card
insurance policy pays premiums and the insurance company provides
protection against unforeseeable events. There are three
basic types of coverage under credit card insurance:
- Unemployment protection, which covers the minimum payments
due if a policyholder is voluntarily or involuntarily
- Disability protection, which covers the minimum payments due
after a medical disability.
- Life protection, which covers the entire credit card debt at
the time of the policyholder's death.
How Will it Benefit MetLife?
Credit card insurance has been in the market for many years now,
but it is generally provided by the card companies themselves.
There are few instances of an insurance company venturing into the
credit card insurance market. The growth in the number of credit
cards in circulation presents a huge market opportunity for credit
card insurance. The Center for Economic Justice estimates that
credit card insurance generates over $2 billion in revenue each
Although the impact of this newly launched credit card insurance
policy on MetLife's share of the U.S. life & health insurance
market will be minimal, if MetLife receives a positive
customer response, it may decide to partner with several other
banks and introduce a series of card insurance policies. This could
have a sizable impact on its market share and provide some upside
for the company's shares.
See our full analysis of MetLife