Insurance carriers eye merger option

MetLife Inc. of New York recently approached Hartford (Conn.) Financial Services Group Inc. about a merger, insiders told The Wall Street Journal. The talks didn’t go anywhere, the insiders said, but the gesture shows that life insurers are beginning to sweat under the pressure of the battered financial services sector. Stocks for both carriers have been bashed in the markets over the last two weeks. This week alone, MetLife’s stock plunged 32.45%, while Hartford fell by 5.99%. Both have reported attempts on raise capital this week, with Hartford announcing a $2.5 billion capital investment from Allianz SE of Munich, Germany, and a 40% cut on dividends. MetLife yesterday said that it would offer 75 million shares, priced at $26.50 each, or about $2 billion. That money would be used for general corporate purposes and possible strategic initiatives. Tough times in the stock market could indeed mean new opportunities for insurers who are looking to make acquisitions of their peers, noted Andrew Edelsberg, vice president of life and health at A.M. Best in Oldwick, N.J. “There will probably be some companies that appear unable to go on alone,” he said. “Sometimes these markets push companies into consolidation.”