Metlife Meets Insurtech App to App

Abstract

This case examines the key issues facing MetLife, a major company in life and annuity (L&A) andto a lesser extentproperty and casualty (P&C) insurance. The case provides an opportunity to analyze the business models of insurance companies, the main risks they face, and the broad investment strategies they pursue. The case also discusses how technology (including insurtech), regulation, and risk affect MetLife and insurance companies in general, and describes MetLife's history and recent developments. Finally, the case presents an opportunity for a simple valuation of an insurance company using multiples. Excerpt UVA-F-1947 Rev. Jan. 27, 2021 MetLife Meets Insurtech App to App It was February 2020, and Nika Pradesh, a pension fund manager, was walking to her office in New York City. She passed Metropolitan Life Insurance Company (MetLife), a major provider of insurance and financial services, at 200 Park Avenue, and began wondering how its business model might change in response to technological innovation and market competition. Pradesh knew MetLife was among the world's largest providers of insurance, annuities, and employee benefit programs, and had 48,000 employees and almost 100million customers in nearly 50countries, including the United States and parts of Asia, Europe, Latin America, and the Middle East (with leading positions in Chile, Japan, Mexico, and South Korea, among other countries). Founded in 1868, the company was 44th by revenue in the 2019 Fortune 500 of US corporations, earning $ 68 billion on nearly $ 600 billion in combined managed assets. In 2019, MetLife was the largest life insurance company in Latin America and the United States. MetLife had made its initial public offering (IPO) in 2000, shifting from a mutual insurance company run for the benefit of its policyholders to a for-profit public company. In 2016, the company announced it would be spinning off a large portion of its US retail businessincluding individual life and annuities insurance for retail customersinto a separate company, Brighthouse Financial (Brighthouse). The spinoff was seen as an effort to provide MetLife with less volatile earnings, among other goals. Brighthouse started operations in 2017. Pradesh was curious how a company the size of MetLife managed its revenues from life insurance, dental insurance, disability insurance, annuities, automobile insurance, health insurance, and other products. She was interested in the future of insurance companies generally and MetLife specifically. How would the industry and company respond to trends in technology and regulation? How would they assess and respond to existing and emerging risks? Moreover, how might their value (see Appendix 1) be affected as they managed their general accounts (see Appendix 2)? . . .