MetLife on Tuesday said it plans to separate much of its Charlotte-based retail business as the company looks to decrease its size and limit federal capital requirements.
The New York-based life insurance giant said it’s considering a possible spinoff, sale or an initial public offering of shares in an independent, publicly traded company. MetLife said it’s taking steps to prepare financial statements that would be required for an IPO or spinoff.
MetLife intends to keep the separated company headquartered in Charlotte, led by Executive Vice President Eric Steigerwalt, who is based in the city, company officials said. In April, MetLife said it had more than 1,500 employees in Charlotte, exceeding its target to hire more than 1,300 by the end of 2015.
MetLife joins General Electric Co.’s finance unit in seeking to simplify operations after being designated by a U.S. panel as a non-bank systemically important financial institution, a tag that can lead to stricter limits on the balance sheet. CEO Steven Kandarian has sought to reverse that designation in court.
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“We have concluded that an independent new company would be able to compete more effectively and generate stronger returns for shareholders,” Kandarian said in a statement.
Although MetLife is appealing the company’s designation as a systemically important institution, “this risk of increased capital requirements contributed to our decision to pursue the separation of the business,” he added.
The new company would have about $240 billion of assets and accounts for approximately 20 percent of MetLife’s operating earnings, the company said.
Any transaction that might occur would be subject to various conditions, including the approval of the MetLife board and meeting Securities and Exchange Commission requirements. No shareholder approval is expected to be needed.
MetLife did not provide an expected completion date but said it could file a registration statement with the SEC in about six months if it decides to pursue an IPO. The company said it can give no assurance that a separation may take place. The complete management team for the new company and the board of directors would be set over time, MetLife said.
In 2013, MetLife announced plans to consolidate its U.S. retail operations in Charlotte. As part of that announcement, the company also said it would create about 1,300 jobs in Cary and establish a separate global technology and operations hub there.
In exchange for state incentives, MetLife was required to create at least 2,098 jobs in North Carolina by the end of 2015. The company could receive incentive grants totaling as much as $87.2 million over a 12-year period. The amount, to be awarded through the state’s Job Development Investment Grant program, is the largest JDIG grant in North Carolina history, according to the state’s Commerce Department.
Its state incentives package also included a $2 million grant the state said is based on the company meeting certain performance requirements. The city of Charlotte and Mecklenburg County also approved roughly $3 million in incentives for MetLife, which is in Ballantyne Corporate Park’s Gragg and Woodward buildings.
In after-hours trading, MetLife shares were up more than 7 percent at $44.95.
Bloomberg News contributed