MetLife Eyes $14 Billion Deal for AIG’s Alico Life Insurance Unit

By | January 20, 2010

MetLife Inc. is in talks to buy AIG’s American Life Insurance Co (Alico) unit in a deal that could be valued between $14 billion and $15 billion, a source familiar with the matter said Tuesday.

Nothing has been finalized yet and a deal may not happen, the source said. American International Group Inc. is also looking at other options for Alico, including an initial public offering, the source said.

A sale of Alico would be the largest for AIG since its September 2008 bailout, and a transformational deal for MetLife, the largest publicly traded U.S. life insurer, in the fast-growing international markets.

“You are talking about one of the largest — if not the largest — international platforms for life insurance, health insurance and savings products in the world,” Raymond James analyst Steven Schwartz said. “So if the price was right, I think Met would love to own Alico.”

Alico, which was founded in 1921, sells life insurance and retirement products to 19 million customers in 54 countries.

Last month, MetLife Chief Executive Robert Henrikson said the company was “wide open to really accretive” acquisitions, or deals that could significantly bolster growth.

Henrikson said that MetLife would be able to pay a $14 billion price tag suggested by Citigroup analyst Colin Devine

for Alico and that the company would be willing to pay a lot for a “transformational deal.”

In an emailed statement Tuesday, MetLife spokesman Chris Breslin said MetLife does not need to enter into a deal to meet its business objectives, and any deal it pursues would be strategically important and financially attractive.

AIG spokesman Mark Herr and Breslin declined to comment on the news first reported by The Wall Street Journal. The source declined to be identified because the talks are private.

AIG, which was propped up by a U.S. aid package of roughly $180 billion, has announced some two dozen deals to sell assets for more than $11.9 billion.

But Robert Benmosche, a former MetLife chief who took over as AIG’s chief executive last summer, has slowed the divestment process and pulled some auctions as he tries to rebuild the insurer’s businesses.

AIG, which is nearly 80 percent owned by the government, has been planning to take Alico public as part of its efforts to repay the government, but Reuters has previously reported MetLife’s interest in buying the unit.

The insurer has put Alico and American International Assurance (AIA) in special purpose vehicles, and given the New York Federal Reserve a preferred stake in them. The Fed’s interest in the Alico vehicle is worth $9 billion, while that in AIA is worth $16 billion.

AIG shares were up 2 percent at $28.60 on the New York Stock Exchange and MetLife was up 2.7 percent at $38.87.

(Reporting by Paritosh Bansal, editing by Phil Berlowitz, Tim Dobbyn and Matthew Lewis)

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