October 31, 2020

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MetLife Boosts Group Benefits Business With Acquisition

MetLife, Inc. MET recently inked a definitive agreement to acquire Versant Health, which is a leader in vision care and owner of renowned Davis Vision and Superior Vision, from private investor group headed by Centerbridge Partners.

Subject to customary approval, the all-cash transaction valued at $1.675 billion is likely to conclude by the end of fourth-quarter 2020.

Benefits of the Deal

The deal will enable MetLife to have access to around 35 million members of Versant Health, which in turn, is likely to enhance its vision benefit offering. Notably, MetLife has an impressive record of providing group vision insurance to customers since 2012. The latest deal will not only make it the third largest U.S. vision insurer with around 38 million members but also benefit clients, who will have access to the largest provider and plan options network of Versant Health.

Apart from making MetLife a leader in managed vision care, the deal is likely to boost revenues as well. It is also expected to be accretive to the company’s earnings per share (EPS) and free cash flows.

The latest move highlights MetLife’s efforts to tap vast opportunities prevailing in the U.S. managed vision care market. In fact, over 90% of employees are keen on getting vision insurance from their employer. This only strengthens the prospects of the latest Versant Health buyout that will add enhanced vision insurance offerings to MetLife’s Group Benefits platform.

The deal is likely to bolster MetLife’s robust Group Benefits business, which has been minutely catering to the diverse needs of around 41 million U.S. employees and their dependents. The company, which already occupies a dominant position in the U.S. Group Benefits industry with an estimated market share of 15%, provides more than 35 group products and services — perhaps the maximum offered across the same industry.

Shares of this Zacks Rank #3 (Hold) multi line insurer have lost 17.8% in a year compared with the industry’s decline of 22.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Moreover, MetLife has always been proactive in undertaking steps to offer enhanced benefits solutions. Case in point, the company partnered with Barnum Financial Group last month to offer financial education to workforces through its PlanSmart financial education programs. Notably, PlanSmart is the financial wellness solution launched by MetLife in 2018.

Two months prior to that, MetLife extended alliance with PlanSource, which is renowned for offering cloud-based solutions aimed at enhancing the process of benefits administration for HR personnel and employees. Other insurance companies like Prudential Financial, Inc. PRU, Lincoln National Corporation LNC and Aflac Incorporated AFL have also integrated the benefits platform of PlanSource.

Furthermore, MetLife has made efforts to penetrate into the pet insurance space with the buyout of PetFirst last year. The company has also been keen on foraying into the digital estate planning space as evident from Willing acquisition in 2019 itself. These initiatives have helped MetLife to emerge as a preferred choice for employers across the United States by offering newer group benefit offerings.

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