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MetLife Inc. (MET), the largest U.S. life insurer, is expanding the portfolio of Americas head William Wheeler with a $2 billion deal, highlighting the potential he may be the next chief executive officer.
MetLife’s agreement to buy AFP Provida SA (PROVIDA) from Banco Bilbao Vizcaya Argentaria SA (BBVA), announced Feb. 1, bolsters the New York- based insurer’s presence in Latin America while trimming its reliance on capital-intensive offerings.
Wheeler, who was chief financial officer during the worldwide credit crisis, was named head of the Americas in 2011 as CEO Steven Kandarian revamped the insurer’s management structure after MetLife acquired American Life Insurance Co. Wheeler is pulling back from capital-intensive products such as variable annuities in the U.S. and cutting costs as MetLife seeks emerging-markets growth.
“The board wanted him to have operating experience before considering him for the CEO role,” said Sean Dargan, an analyst at Macquarie Group Ltd. “He’d have to be considered as a leading candidate to replace Steve Kandarian.”
Wheeler, 51, would be MetLife’s second straight CEO to come from a finance background. He was CFO since 2003, and worked as a banker at Donaldson, Lufkin & Jenrette before joining MetLife in 1997.
“I love the job I have, and if I did this job well, that would be a great capstone to my career,” Wheeler said in response to a question about whether he’d like to be CEO. “The job I have I really enjoy and I’m just trying to do the best I can at it.”
Kandarian, who turns 61 this year, replaced Robert Henrikson in 2011 as Henrikson neared the mandatory retirement age of 65. Kandarian had been MetLife’s chief investment officer for six years.
The Americas region, MetLife’s largest, has been challenged by slow growth in the U.S., which was targeted for most of the $600 million in cost reductions announced in May. MetLife said in December it’s planning to cut variable-annuity sales by about 40 percent to as little as $10 billion this year. Wheeler oversaw MetLife’s bank, which the insurer has been winding down.
Life insurers “value operations experience,” said Jimmy Bhullar, an analyst at JPMorgan Chase & Co. “He probably is the next in line, potentially, to be the next CEO.”
Operating earnings in the Americas are projected to grow 1.5 percent this year, the slowest of MetLife’s three regions, the insurer said in a presentation in December.
“The competitive environment as well as the growth potential in most Latin American and Asian countries is better than in the U.S.,” Bhullar said. “The growth in the U.S. business is going to be relatively modest.” Provida is the largest private pension fund administrator in Chile, with about $45.3 billion under management.
As CFO, Wheeler helped integrate Alico, the insurer with operations in more than 50 countries that MetLife bought for about $16 billion from American International Group Inc. He also worked on the $11.7 billion purchase of Travelers Life & Annuity from Citigroup Inc. in 2005.
After Kandarian was named CEO, Wheeler and William Mullaney, president of the U.S. business, were given stock-based “special grants.” The awards were “in recognition of the critical nature of their roles at the company and to encourage them to continue with the company,” MetLife said in a 2011 filing. Mullaney later left after his position was eliminated.
Kandarian also appointed Michel Khalaf to head the Europe, Middle East, and Africa region, and hired Christopher Townsend from AIG to lead operations in Asia. Kandarian hired John Hele from Arch Capital Group Ltd. (ACGL) as CFO in July. Steven Goulart was promoted to chief investment officer in May 2011 to replace Kandarian. He joined MetLife as head of mergers and acquisitions.
Moves by Wheeler and Kandarian helped MetLife navigate the financial crisis and its aftermath. MetLife divested real estate near the market’s peak, including the $5.4 billion sale of Stuyvesant Town and Peter Cooper Village in New York.
Wheeler built up protection against low interest rates in the mid-2000s. In 2006, when the yield on the 10-year Treasury rose above 5 percent, Wheeler boosted the insurer’s protection against low rates to $37.4 billion, more than triple the notional value of interest-rate floors a year earlier. Ten-year U.S. debt now yields about 2 percent.
The insurer took in at least $1.5 billion betting on low rates, “the easiest billion dollars we ever made,” Wheeler said in 2009.
Wheeler earned an MBA at Harvard Business School, and graduated from Wabash College in 1983 with a degree in English. He’s on the board of trustees at the Crawfordsville, Indiana- based liberal-arts college.
Wheeler was promoted to CFO for the institutional business in 2000 and helped take the company public.
Even as MetLife scales back from capital-intensive products, Wheeler said it is seeking to boost sales of some coverage at U.S. work sites. MetLife may sell supplemental health coverage via its employee-benefits business as President Barack Obama’s Affordable Care Act creates demand. The insurer is also boosting efforts to sell directly to consumers, he said.
“The challenge for us in the U.S. is with the low interest-rate environment, the product pricing and the guarantees we’re selling, we’re having to change,” Wheeler said. “Being the former CFO gives me the ability to kind of explain that and have some credibility about it, when we talk to both our customers and our sales people.”
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