The spinoff of Brighthouse Financial, MetLife’s retail distribution arm, will take place sometime after the first half of the year, MetLife executives said.
MetLife had originally planned to complete the separation by June 30.
“Given the complexity of the transaction, we do not believe we have the necessary approvals to complete the separation in that timeframe,” said Steven A. Kandarian, chairman, president and CEO of MetLife.
Kandarian did not have an “exact estimate” for the separation. “We are hopeful it will be in the coming months,” Kandarian said in a conference call with analysts.
Operational milestones toward the launch of Brighthouse Financial into a separate company have already been reached, he said.
Milestones include Brighthouse Financial doing business under its own name and brand, the launch of a broadcast advertising campaign, and the formation of a captive insurer to house liabilities of universal life with secondary guarantees (ULSG).
“The MetLife and Brighthouse Financial teams continue to work diligently with our regulators in all aspects of the disaffiliation,” Kandarian said.
The next regulatory hurdle will be the declaration of hearing date by the Delaware insurance regulators, he said.
Spinning off Brighthouse Financial, which was announced last year, is considered a vital chapter MetLife’s transformation into a more nimble insurer in an era of heavy regulation and global competition.
Brighthouse Earnings Contract in 1Q
Until the spinoff, Brighthouse is operating as a standalone operating business segment within MetLife.
Brighthouse Financial’s first quarter operating earnings dropped 25 percent to $244 million compared with the year-ago period. MetLife reported that earnings drop was due to the separation costs and activities with MetLife Holdings.
Operating premiums, fees and other revenues were $1.1 billion, compared with $1.3 billion in the first quarter of 2016.
Overall annuity sales shrank 35 percent, and life sales plummeted 54 percent. This mostly was the result of suspension of sales through one distributor and lower sales from the former MetLife Premier Client Group, MetLife said.
Sales of Brighthouse Financial’s Shield Level Selector index-linked annuity rose 25 percent to $455 million compared with the year-ago period.
Spinning off Brighthouse Financial will turn Brighthouse into one of the largest life and annuity companies in the U.S. overnight. The new company will have about $240 billion in assets, 2.6 million insurance policies and annuity contracts, and a robust distribution network.
MetLife Delivers Earnings Beat in 1Q
MetLife on Wednesday reported first-quarter earnings of $820 million.
The ompany said it had net income of 75 cents per share. Earnings, adjusted for non-recurring costs, were $1.46 per share, the Associated Press reported.
The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.27 per share.
The insurer posted revenue of $16.27 billion in the period. Its adjusted revenue was $16.88 billion.
MetLife shares have dropped slightly more than 3 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed almost 7 percent. In the final minutes of trading on Wednesday, shares hit $52.10, a rise of 16 percent in the last 12 months.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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