MetLife Inc. is considering acquisitions in the private credit market as a key component of its new five-year strategic plan, according to Chief Financial Officer John McCallion. This move signals a strategic shift towards capitalizing on emerging trends in non-bank lending.
MetLife is well-positioned to leverage these trends, given its established presence and experience in the lending space. “Our pre-existing foothold here puts us in a great position to capture these emerging trends around nonbank lending,” McCallion stated during MetLife’s annual investor day. He emphasized the company’s strengths as a “large, long-term, experienced lender” with a track record of generating “excess spreads with low loss experience.”
Since 2019, MetLife’s private credit business has originated approximately $117 billion in assets across various sectors, including infrastructure, private structured credit, residential credit, corporate private placements, and middle-market private capital. This substantial portfolio demonstrates the company’s commitment to and capabilities within the private credit market.
Beyond direct lending, MetLife anticipates benefiting from the increasing fragmentation of the broader asset management industry. McCallion, who also leads MetLife Investment Management, suggested that the company could absorb smaller players seeking greater scale. This consolidation strategy could further enhance MetLife’s market position and investment capabilities.
The new strategic plan, the second under CEO Michel Khalaf, aims to achieve an adjusted return on equity of 15% to 17% and deliver double-digit growth in adjusted earnings per share. These ambitious targets underscore MetLife’s commitment to delivering strong financial performance.
McCallion also addressed concerns about recent investment performance, expressing optimism for improvement in variable investment income. He acknowledged that lower private equity returns had negatively impacted returns in previous quarters but anticipates a rebound in the future. This positive outlook suggests confidence in the long-term viability of MetLife’s investment strategy.
In conclusion, MetLife’s strategic focus on private credit acquisitions and broader industry consolidation reflects a proactive approach to capitalizing on evolving market dynamics. The company’s established lending expertise, coupled with its ambitious financial targets, positions it for continued growth and success in the evolving financial landscape. This strategic direction signals a commitment to delivering strong returns for investors and solidifies MetLife’s position as a key player in the financial services industry.
