Fidelity suspends MetLife annuity sales as insurer mulls breakup

The second-largest U.S. mutual fund company stopped sales of MetLife's annuities in light of uncertainty surrounding a possible sale of its retail unit.
FEB 25, 2016
Fidelity Investments, the second-largest U.S. mutual fund company, suspended sales of MetLife Inc.'s annuities as the life insurer weighs a possible sale, spinoff or public offering of a retail unit that provides the retirement products. “In light of MetLife's announcement that it is considering spinning-off its U.S. retail business and the limited information available at this time, we have made the decision to temporarily pause the sale of MetLife annuities,” Joe Madden, a spokesman for Fidelity, said Wednesday in an e-mail. MetLife Chief Executive Officer Steve Kandarian said last month that the unit selling annuities was at a “significant competitive disadvantage” because his company faces the prospect of tighter capital rules after being designated a non-bank systemically important financial institution. His plan left unanswered questions about the timing of the split and what form it will take. The loss is a setback for MetLife, the largest U.S. life insurer, which has declined about 21% this year in New York trading. The insurer's Accumulation Annuity and Growth and Income Annuity are no longer available to new investors through Fidelity, the company says on its website. “There is risk that MetLife may lose some distribution relationships as a result of the breakup” Tom Gallagher, an analyst at Credit Suisse Group AG, said in a note Wednesday. When MetLife unveils more details about the split, that may “ease concerns distributors may currently have about uncertainty created by the breakup.” MetLife sold about $7.4 billion of annuities in the first nine months of last year, according to data from Limra, an industry group. That ranks seventh in the U.S. in that industry. John Calagna, a spokesman for New York-based MetLife, had no immediate comment. “We will continue to monitor the situation and evaluate future actions as we receive additional information,” Fidelity's Mr. Madden said. “It is important to note, however, that Fidelity still has a broad array of annuity products on our platform to meet customers' savings and income needs.”

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