MetLife Inc. (MET), the largest U.S. life insurer, is pushing agents to sell more car and residential coverage after the head of the company’s main retail business said they’ve been missing an opportunity to diversify sales.
“Out of our 58 agencies, we had two agencies last year who were doing meaningful amounts of auto and home business,” Eric Steigerwalt, who runs the U.S. retail business, said today at a conference sponsored by KBW. “It’s ridiculous.”
MetLife Chief Executive Officer Steve Kandarian, 61, is increasing sales of protection products at the New York-based insurer, while scaling back from capital-intensive businesses such as variable annuities and some types of life coverage. Steigerwalt said today that he’s increasing the number of agencies pushing home and car coverage to about 15 next year, after promoting the products via five this year in a pilot.
Steigerwalt, the former interim chief financial officer who was appointed last year to the retail post, has been cutting costs by getting rid of about a third of the company’s advisers and moving jobs to North Carolina. He’s also shifting the mix of business, retreating from some life and savings offerings and highlighting home and auto coverage.
“These are products everyone needs,” he said. “Returns so far on these pilot agencies are quite good.”
Operating premiums and fees from the retail property-casualty business rose 4.5 percent to $440 million in the second quarter from a year earlier. The figure was $425 million in the third quarter of 2011.
MetLife was the No. 15 seller of homeowners’ coverage last year with a 1.3 percent market share, and the No. 14 seller of private passenger auto policies, according to data from the National Association of Insurance Commissioners. State Farm Mutual Automobile Insurance Co. was the leader in both categories, followed by Allstate Corp. (ALL) MetLife’s share of the private auto market has changed little since 2008.
Steigerwalt has challenged MetLife’s sales staff before. He said in May that the company had cut its adviser force to about 5,000 from 7,500 in February of 2012, and the ones who were dismissed “were never going to make it in this business.”
MetLife hasn’t advertised the car and home coverage as aggressively as some rivals, instead focusing on sales to existing customers. The company uses characters from the Peanuts comic strip such as Snoopy and Lucy in television commercials for its life coverage.
Kandarian is curtailing business tied to capital intensive products amid pressure from low interest rates, which have weighed on profits. Life insurers typically invest premiums from clients in bonds to back future payouts. Guarantees tied to some annuities also hurt results when stocks tumbled amid the 2008 financial crisis.
“In the traditional variable annuity space, we have ceded some market share, and we’re OK with that,” Steigerwalt said.
MetLife has declined about 15 percent in the past five years, while Allstate, the largest publicly traded seller of home and auto insurance, climbed 14 percent. The Standard & Poor’s 500 Index (SPX) has advanced 40 percent in that period.
Kandarian’s company gained 1.6 percent to $47.85 at 4:15 p.m. in New York.
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