MetLife Inc. (MET:US) is in advanced talks to buy the Chilean pension-management unit of Banco Bilbao Vizcaya Argentaria SA (BBVA), which has a market value of more than $2 billion, said three people with knowledge of the matter.
MetLife executives may be prepared to sign a deal for the unit, known as AFP Provida SA, within days or weeks, said the people, who asked not to be named because the talks are private. The discussions could falter and another bidder could always prevail, one of the people said.
MetLife Chief Executive Officer Steven Kandarian is pursuing growth beyond the U.S. as low interest rates and sluggish economic expansion pressure profit at the nation’s largest life insurer. MetLife, based in New York, follows Principal Financial Group Inc. (PFG:US) in seeking revenue from Latin America. The Des Moines, Iowa-based insurer agreed in October to buy Chilean pension provider AFP Cuprum SA (CUPRUM) for about $1.5 billion.
John Calagna, a MetLife spokesman, declined to comment on negotiations, as did Paul Tobin at Bilbao, Spain-based BBVA. Chilean media, including La Segunda online, have previously reported MetLife’s interest.
BBVA has sought buyers for its pension-fund assets in Chile, Mexico, Peru and Colombia this year as it attempts to recover from Spain’s real estate slump. It agreed last month to sell the Mexican operation to a group of local buyers for $1.6 billion. BBVA owns a majority stake in Provida, whose shares trade in Santiago.
MetLife rose 0.5 percent to $33.30 at 9:58 a.m. in New York. American depositary receipts of Provida gained 0.1 percent to $101.71. Each ADR is the equivalent of 15 ordinary shares. BBVA advanced 1.5 percent to 6.99 euros in Spanish trading.
Provida is Chile’s largest pension fund manager, with about $45.5 billion under management as of Nov. 30, according to data from the country’s pensions regulator. Chilean pension providers, called AFPs, manage a total of $160 billion in assets, according to the regulator.
MetLife is targeting return on equity of at least 12 percent by 2016, driven by growth outside the U.S. The insurer said in May it’s seeking to boost business in emerging markets to at least 20 percent of operating earnings, from about 14 percent this year.
Operating earnings from Latin America increased 15 percent in the third quarter from a year earlier, excluding the impact of currency fluctuations. Growth in premiums, fees and other revenue in Mexico, Brazil and Argentina was offset by a decline in Chile, the insurer said.
The company may consider deals that cost about $2 billion to $3 billion, Kandarian said in May as he discussed strategic plans. The insurer estimated it would have $5.4 billion in cash and liquid assets at the holding-company level at the end of this year, according to a slide presentation this month.
The insurer purchased American Life Insurance Co. for about $16 billion from American International Group Inc. (AIG:US) in 2010 to expand beyond the U.S. The unit had about 12,500 employees and operations in more than 50 countries at the time.
MetLife grew in Japan, Australia and the U.K. with the $11.7 billion purchase of Travelers Life & Annuity from Citigroup Inc. in 2005. The company bought Mexico’s biggest life insurer, Aseguradora Hidalgo SA, for about $962 million in 2002, and entered the Brazil dental market with a 2008 acquisition, after opening for business in the country in 1999. It added Banco Santander SA’s Chilean insurance units in 2001 for more than $200 million.
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