New MetLife Hubs In N.C. Come Amid Cost-Cutting

By Andrew Dunn, The Charlotte Observer
McClatchy-Tribune Information Services

March 08--MetLife's decision to bring 2,600 jobs to North Carolina comes as the company seeks to cut $600 million in annual expenses.

The insurance giant has been a company in transition over the past few years, repositioning itself since the financial crisis to have more of an international presence while shedding its banking ventures. The company has also struggled of late with low interest rates, which have made it harder to make money on its huge investment portfolio.

Like many financial companies facing the same environment, MetLife has focused on becoming more efficient.

The new hubs in Charlotte and Cary will consolidate office space from more than 30 locations in the Northeast, where real estate is more expensive. Spokesman John Calagna also said the company determined that having employees work alongside each other will boost productivity.

The move comes as MetLife finishes a decade-long chapter in its history.

The company grew steadily through the early 2000s, expanding into international markets and the banking world through its acquisitions of a retail bank unit and a mortgage business.

Then the financial crisis hit, sending the stock plummeting and creating heavy losses in 2009. The bank was forced to raise billions in capital through a stock sale, but did not take money from the federal Troubled Asset Relief Program bailout.

Though banking was never a large part of MetLife's business, MetLife drew increased federal scrutiny in the aftermath of the crisis because of its status as a large bank holding company.

The company failed the financial stress test mandated by the Federal Reserve for large banks last March and was not allowed to buy back stock. MetLife was also fined $3.2 million by the Federal Reserve in August for "unsafe and unsound practices" related to its mortgage servicing business.

That oversight led MetLife to speed its exit from the banking world, saying that type of regulation didn't make sense for an insurance company.

In November, the company announced it would sell its $70 billion mortgage servicing portfolio to JPMorgan Chase. MetLife's sale of its retail banking business to GE Capital was approved in January.

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MetLife succeeded in shedding its status as a bank holding company in February.

At the same time, the company has been bolstering its international presence. In 2010, MetLife bought an American International Group subsidiary for $16.2 billion that put it in Asian and Middle Eastern markets that it hadn't entered before. MetLife spent $2 billion last month to acquire Chile's largest pension fund administrator.

The company's earnings have also been under pressure by low interest rates, which greatly impact its bottom line. MetLife's investment portfolio includes the hundreds of billions it takes in through insurance premiums.

MetLife earned $1.4 billion in 2012, down 79 percent from the year before. The bank's earnings per share plummeted 83 percent. Company executives also projected its operating earnings would fall this year.

Though the company's stock is up 12 percent so far this year, it remains 35 percent below its price five years ago.

MetLife has about 64,000 employees. It shed 3,000 jobs last year, or about 4 percent of its workforce.

Dunn: 704-358-5235 Twitter: @andrew_dunn


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