MetLife Inc. (MET), the largest U.S. life insurer, is turning to the world’s biggest retailer and Snoopy to boost sales of its policies to less-affluent consumers.
The insurer began offering prepaid life policies at about 200 Wal-Mart (WMT) Stores Inc. locations in South Carolina and Georgia last month, Shane Winn, a spokesman for New York-based MetLife, said in an e-mail today. Shoppers can buy a package adorned with an image of the comic-strip beagle Snoopy that offers as much as $25,000 of coverage for one year.
MetLife is seeking to increase the proportion of policies it sells directly to consumers to add clients and cut costs tied to middlemen. The insurer has set a goal to cut expenses by $600 million by 2016 as it targets return on equity of as much as 14 percent. Direct sales, including those through the internet, may climb to 13 percent of the U.S. individual life market in 2016 from 8 percent in 2010, the company said in a May 23 presentation, citing data from Limra.
“That’s where the growth is, that’s where we need to be,” William Wheeler, president of the company’s Americas division, said that day.
A one-year policy, providing a $10,000 death benefit, is advertised at $69 for people ages 18 to 44. Those 60 to 65 would pay $429 for $25,000 of coverage lasting a year. Customers purchase a prepaid card that holds enough value to cover the policy’s cost and then call MetLife to answer health questions and activate the coverage. Those who don’t qualify can return their purchase or use the card to shop for other products.
The program marks the first time Bentonville, Arkansas- based Wal-Mart has sold life insurance and is part of the company’s efforts to expand offerings of financial products, said Sarah Spencer, a company spokeswoman. She said it’s too early to gauge the customer response.
“We’re trying to make sure our customers have access to affordable, everyday money services,” she said by phone.
The Wal-Mart program is “an effort to pilot a new product in a new channel and in a new market,” and not directly related to the cost-cutting efforts, Winn said.
U.S. life insurers typically focus on selling policies with larger face values to more affluent individuals, said Randy Binner, an analyst at FBR Capital Markets. By distributing coverage at Wal-Mart, MetLife can reach consumers at different income levels, he said.
Insurers “largely focused on affluent and mass affluent Americans, effectively the upper end of the income scale,” Binner said by phone. “There’s a large population in the U.S. that’s pretty underserved.”
MetLife’s branding efforts include its blimp, naming rights for the stadium that’s home to the National Football League’s New York Jets and New York Giants, and Peanuts characters created by the late comic-strip artist Charles Schulz.
“Snoopy and the Peanuts characters are strongly associated with MetLife and they’re obviously very valuable,” Binner said. “To the extent that you have a brand like that that has mass appeal, it’s interesting to think about ways you can make your product more available.”
A website explaining the life insurance sold at Wal-Mart lists prices and terms, and also answers questions about the coverage including “Is it really that easy?”
“Does Snoopy live in a doghouse?” is MetLife’s answer.
The program doesn’t have a set end date and MetLife will evaluate the results later this year, Winn wrote in an e-mail.
MetLife already offers life insurance on the firm’s website and sold $5 million of new premium via that channel in the first three months of this year, Wheeler said. Manulife Financial Corp. offers policies to Canadian customers of Costco Wholesale Corp. (COST), the biggest U.S. warehouse-club chain.
Wal-Mart has been expanding in financial services by offering money transfers, check cashing and bill payment in stores. The retailer sought to open a limited-service U.S. bank for more than a year before abandoning that effort in 2007.
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