Metlife acquires AIG's Alico in £10bn deal
08 March 2010
Metlife is set to acquire AIG subsidiary Alico for over £10bn.
The
consideration will consist of £4.4bn in cash and approximately £5.7bn in
Metlife equity securities, subject to closing adjustments.
Metlife has been
circling Alico for months. Money Marketing understands previous deals have
fallen through due to price.
Living Time,
whose fixed-term annuity products are underwritten by Alico, have suffered as a
result of AIG’s troubles.
Hargreaves
Lansdown head of pensions research Tom McPhail says: “This is really good news
for Living Time who through no fault of their own have been held back by their
association to AIG.
“The fact this
issue is now off the table should open the way for them to develop new business
as a lot of IFAs will look at this as a resolution to an issue that has stopped
them writing business with them.”
Metlife says the
combination of the businesses will create a “global life insurance and employee
benefits powerhouse” with compelling growth opportunities.
The values of
the common stock and the preferred stock are based upon the closing price of
Metlife’s common stock on the New York Stock Exchange last Friday.
Metlife expects
the cash portion of the purchase price to be financed through a combination of
the issuances of senior debt and Metlife common stock as well as cash on hand.
Upon completion
of the transaction, Metlife, which is already the largest life insurer in the
United States and Mexico, will become a leading competitor in Japan and
materially advances Metlife’s position in Europe, the firm says.
Chairman, president and chief executive officer C. Robert Henrikson says: “With
this acquisition, Metlife is delivering on its strategy to accelerate
international expansion as a powerful growth engine for the company.
“Today’s
transaction will bring together two profitable, complementary, well-established
businesses with superb track records and strong
long-term growth potential. We expect it will increase Metlife’s return on
equity and be accretive to operating earnings.”
