By David French

NEW YORK (Reuters), MetLife Inc. (NYSE:) has begun to explore the sale of its U.S. variable anuity book in an effort to increase its ability to invest in high-growth areas.

According to sources, New York’s insurer has been working with an investment bank for the plan. However, they cautioned that it is still early days and no agreement is imminent.

MetLife doesn’t disclose the value of its variable annuity businesses. The company’s financial statements show that its overall annuity business, including fixed and variable rates, stood at $58.23 Billion at the end 2021.

MetLife would receive only a small fraction of the proceeds from any sale. The sources claimed that the financial benefits of selling the policies would still be significant – possibly in the millions of dollars – due to the release of capital, tax implications, and other financial enhancements.

They spoke under the condition of anonymity in order not to reveal confidential information. MetLife refused to comment.

U.S. insurance companies have recently been selling their annuity businesses that are no longer in use. This requires significant capital, and provides limited revenue growth because there is not a lot of new policy writing.

Private equity companies and insurance arm owners have been willing to buy insurers. They can then use the cash flow from these policies to purchase credit products and invest it in other areas.

MetLife Holdings is MetLife’s Variable Annuities Book. MetLife Holdings holds product lines the insurer does not actively sell and only manages them to maturity.

John McCallion was MetLife’s Chief Financial Officer. He stated to analysts this month, that rising interest rates could lead to the need for MetLife to sell off some of its runoff businesses. MetLife Holdings is not being sold, McCallion said.

Until now, most runoff deals have been in fixed rate annuities or life insurance. Variable annuities see less interest because there’s a higher chance of not earning enough return on investment.

This is changing, though, as higher interest rates are making it more difficult to make a profit from such policies. The yields that can be earned through investments generally increase, so this trend is beginning to shift.

Prudential Financial Inc. (NYSE 🙂 stated in September that it has agreed to sell variable insurance policies to Fortitude Re for $31 Billion. Fortitude Re is a buyout company. Carlyle Group (NASDAQ:), with a transaction value totaling $2.2 Billion