“MetLife Inc. (MET), the largest U.S. life insurer, agreed to buy Chilean pension manager AFP Provida SA (PROVIDA) from Banco Bilbao Vizcaya Argentaria SA (BBVA) in a deal valued at about $2 billion to add fee income in Latin America.
MetLife will conduct a public cash tender offer for all of the outstanding shares of Provida, the insurer said in a statement through the Business Wire. BBVA has agreed to transfer its 64.3 percent stake to MetLife, according to the statement.
MetLife is expanding in faster-growing markets with the Provida deal, after acquiring American Life Insurance Co. in 2010 to build operations in Asia and Europe. Chief Executive Officer Steven Kandarian has set a goal of generating at least 20 percent of operating earnings fromemerging markets by 2016 as he targets return on equity of 12 percent or more.
“It fits in well with many parts of their strategy,” Jimmy Bhullar, an analyst at JPMorgan Chase & Co., said in an interview before the deal was announced. “It seems like it’s a good business.”
Chile’s economy is projected to expand by 4.5 percent this year, compared to U.S. growth estimated at 2 percent, according to economists’ estimates compiled by Bloomberg. Low interest rates and slow economic growth have weighed on results at New York-based MetLife.
With the acquisition of Provida, MetLife’s operating earnings from emerging markets are expected to grow to about 17 percent from 14 percent currently, according to the statement.
Seeking Buyers
BBVA has sought buyers for its pension-fund assets in Chile, Mexico, Peru and Colombia….”
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