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What does the company do?

Metlife provides life insurance, employee benefits, and financial services both in the US and internationally. MET has taken actions to simplify its business model in recent years, including spinning off Brighthouse in 2017, selling the P&C business to Farmers, and creating MetLife Holdings, a segment which includes run-off businesses such as variable annuities, defined contribution, and fixed annuities. What is left is a collection of businesses which we believe have favourable growth characteristics (less capital markets and less macro sensitive) and that should provide a higher return profile. We believe that this level of growth can be sustained over the cycle driven by international growth, particularly in Latin America and China, where MET has strong distribution partnerships and the penetration of life insurance is lower than in developed countries. In addition, growth in the US will provide some support, mainly in Group insurance, where MET has a leading market share, but is still underpenetrated in small business. Despite the strong growth and return characteristics, MET continues to trade at a discount to peers with less favourable growth and return profiles. We believe that this discount will close over time. We see material upside on a combination of sustained book value growth, a solid dividend yield, and an eventual multiple re-rating.

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