The consideration will consist of £4.4bn in cash and approximately £5.7bn in Metlife equity securities, subject to closing adjustments.
Metlife has been circling Alico for months. Money Marketing understands previous deals have fallen through due to price.
Living Time, whose fixed-term annuity products are underwritten by Alico, have suffered as a result of AIG’s troubles.
Hargreaves Lansdown head of pensions research Tom McPhail says: “This is really good news for Living Time who through no fault of their own have been held back by their association to AIG.
“The fact this issue is now off the table should open the way for them to develop new business as a lot of IFAs will look at this as a resolution to an issue that has stopped them writing business with them.”
Metlife says the combination of the businesses will create a “global life insurance and employee benefits powerhouse” with compelling growth opportunities.
The values of the common stock and the preferred stock are based upon the closing price of Metlife’s common stock on the New York Stock Exchange last Friday.
Metlife expects the cash portion of the purchase price to be financed through a combination of the issuances of senior debt and Metlife common stock as well as cash on hand.
Upon completion of the transaction, Metlife, which is already the largest life insurer in the United States and Mexico, will become a leading competitor in Japan and materially advances Metlife’s position in Europe, the firm says.
Chairman, president and chief executive officer C. Robert Henrikson says: “With this acquisition, Metlife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company.
“Today’s transaction will bring together two profitable, complementary, well-established businesses with superb track records and strong
long-term growth potential. We expect it will increase Metlife’s return on equity and be accretive to operating earnings.”
Living Time managing director of sales and marketing Dave Harris adds: “I am delighted that Metlife has entered into a transaction to buy Alico as it brings to an end a long period of uncertainty.
“Metlife is one of the largest insurance companies in the world and are already well established in the UK retirement market.
“During the coming months it will be business as usual for Living Time as we continue to rapidly grow our business whilst the Metlife deal gets the necessary regulatory approvals.”
Harris says he is confident the Metlife/ Alico deal will boost IFA take-up of Living Time’s products.