UBS Investment Research: MetLife, 'Great Outlook, but Over Time'

Upon the completion of MetLife's Alico acquisition from AIG, the company has expanded its global footprint and enhanced the geographical reach of its international division rendering it more competitive on the world stage. MetLife views the heavier international presence, especially in emerging markets as a crucial tool that will raise ROE and lower its risk profile. MetLife also hopes to expand its direct business by selling life insurance to a notoriously underserved middle market in the US.

There are still risks MetLife must work to mitigate. It hopes to lower its Beta as well as its cost of capital by reducing its involvement with market-risk products (i.e., variable annuities) while boosting protection products (i.e., group, A&H and whole/term life).

Other risks for the company include the possibility of weaker-than-expected economic, credit and equity market performance that analysts worry could deteriorate MetLife's capital cushion thus hindering its ability to deploy excess liquidity and capital at more attractive returns. Other risks include, a persistent pressure on alternative investment returns, adverse mortality, morbidity and policyholder behavior. Rising regulatory and rating agency capital requirements and unfavorable currency exchange rate changes.