Met Life Case Study
Case description
In 1995 METLife, one of the world’s largest insurance companies acquired New England Financial (NEF), one of the oldest and most venerable insurance companies in the U.S. MET’s product line included casualty (Auto and Home) insurance as well as various life insurance products (e.g. Term Life, Whole Life and Annuities). New England Financial focused exclusively on life insurance and wealth management offerings. While the average net worth of the typical METLife customer was approximately $200,000, the net worth of the average NEF client was ten times that amount. It should therefore come as no surprise that the average life policy sold by MET was a term policy with a face value of $50,000, but NEF’s average policy was a whole life product with a face value of $500,000 to $1 million.
In 2000, MET decided that for it to achieve its strategic business objective of becoming a global, full financial services provider to its client base of approximately 15 million individuals (primarily American heads of household), the firm needed to move from its mutual insurance company status to a publicly traded stock company. Since in a mutual company the policy holders are the “owners” of the company and in a stock company the stockholders constitute the owners, MET was obliged to issue stock to all its policy holders, based on the total worth of their policies held by MET. This needed to be accomplished prior to going public and opening the opportunity to other non-policy-holding investors who wished to buy MET shares. To that end, MET needed to locate information on each and every policy owned by its clients, determine the collective value of said policies, and to then provide these policy owners with equivalently valued stock certificates. Unfortunately, each major METLife and NEF insurance product’s data was stored within its own information system and the only way to establish such a list of policy holders and the relative worth of their
In 1995 METLife, one of the world’s largest insurance companies acquired New England Financial (NEF), one of the oldest and most venerable insurance companies in the U.S. MET’s product line included casualty (Auto and Home) insurance as well as various life insurance products (e.g. Term Life, Whole Life and Annuities). New England Financial focused exclusively on life insurance and wealth management offerings. While the average net worth of the typical METLife customer was approximately $200,000, the net worth of the average NEF client was ten times that amount. It should therefore come as no surprise that the average life policy sold by MET was a term policy with a face value of $50,000, but NEF’s average policy was a whole life product with a face value of $500,000 to $1 million.
In 2000, MET decided that for it to achieve its strategic business objective of becoming a global, full financial services provider to its client base of approximately 15 million individuals (primarily American heads of household), the firm needed to move from its mutual insurance company status to a publicly traded stock company. Since in a mutual company the policy holders are the “owners” of the company and in a stock company the stockholders constitute the owners, MET was obliged to issue stock to all its policy holders, based on the total worth of their policies held by MET. This needed to be accomplished prior to going public and opening the opportunity to other non-policy-holding investors who wished to buy MET shares. To that end, MET needed to locate information on each and every policy owned by its clients, determine the collective value of said policies, and to then provide these policy owners with equivalently valued stock certificates. Unfortunately, each major METLife and NEF insurance product’s data was stored within its own information system and the only way to establish such a list of policy holders and the relative worth of their