Less than three years after Robert Benmosche took on the challenge of reinventing dowdy MetLife as a profit machine that would gobble up the competition, the 132-year-old company is looking tony and new.

Going public last April enriched the former mutual insurer by $2.5 billion, and its shares are winners, having soared more than 120% — picture MetLife mascot Snoopy in his aviator goggles — in a nine-month maiden flight above a troubled market. Mr. Benmosche, 56, MetLife’s hard-charging chief executive officer, is garnering the credit. He promises 15% growth in per-share earnings over the next few years. “We have enormous capability to grow organically,” the Brooklyn native said in an interview in MetLife’s grand old Manhattan tower.

But beneath the lofty numbers and bold assertions, the company is struggling. Pressure is building on Mr. Benmosche (pronounced ben-MOE-SHAY) to deliver — or risk MetLife’s becoming prey instead of predator.

“They’re still on mutual time — to make this work as a stock they need to turn this into a growth company,” said Colin Devine, an insurance analyst with Solomon Smith Barney who was one of six analysts to downgrade their ratings on the stock in December.

MetLife “needs to run at an entirely different level to support its current share valuation,” Mr. Devine said. “They need more new blood there. You’ve got people thinking they’re doing a great job, but the problem is, they’re not.”

Mr. Benmosche has made no large acquisitions, as have other financial companies in the post-Glass-Steagall era, when everyone is or may be a competitor.

Nor has he lifted earnings. In fact, the September quarter, the latest for which figures are available, was rather dismal. Though revenues were up 28.9% from a year earlier, at $8 billion, net income was a relatively paltry $241 million, down from $242 million, and per-share earnings were flat at 31 cents.

The problem was investment losses in a treacherous market, a danger not likely to subside this year. Even 1999, when other financial giants were racking up strong gains, was a big letdown for MetLife, whose earnings slumped to $627 million, from $1.3 billion in 1998. So MetLife is looking up from a trough.

With these numbers, MetLife’s super stock price may be in danger. Its huge run-up came just as investors were tiring of dot-coms that made no money — and this timing, may have boosted it higher than its earnings warranted.

Mr. Benmosche plans to give MetLife’s earnings a shot in the arm. He is moving aggressively to restructure the company and to increase revenues from its institutional and individual insurance businesses, the two prime divisions. These accounted for 91% of 1999’s $25 billion in revenues, the latest year for which figures are available, and boosted sales of products such as variable annuities, variable life insurance, retirement plans, and dental policies.

Mr. Benmosche is also expanding outside of insurance, an initiative that began with his acquisition of a small bank last August. And he plans to unite the back-office systems and staff of the three life insurance units and to put pressure on MetLife’s sales force with new standards that require culling from its ranks the lowest-rated agents.

MetLife executives say that cash thrown off by operations may be used to improve earnings per share by buying back the company’s stock and, presuming the stock remains strong, will put the company be in the market for making large acquisitions.

Yet even if Mr. Benmosche delivers on his earnings goals, much of the early gains will have to come from cost cutting. Critics cite the low productivity of MetLife’s 42,000 employees and the unnecessary weight of its real estate portfolio, which includes trophy Manhattan properties such as the 808-foot MetLife Building over Grand Central Terminal.

And expense reduction, they say, can only go so far. Mr. Benmosche, a technology maven, plans to reduce expenses largely through technological improvements and pruning inessential businesses, not through layoffs or the sale of real estate. Revenue increases will have to provide the rest of the growth.

Pushing into new sales areas may be necessary. Sales of traditional whole life insurance policies have been declining for years, but if MetLife seeks new sales routes outside its safe, conservative revenue pool, it also increases the risk that earnings will be more volatile and less dependable than Mr. Benmosche is promising.

He may also have to push long and hard. MetLife’s return on equity stands at 9.5%, up from 7.5% three years ago, and Mr. Benmosche is bent on increasing it to 11.5% in two years. Nevertheless, in an industry where return on equity is notoriously low, MetLife would be 3.5 percentage points below the norm of 15% even if he reaches his two-year goal.

“It’ll be very tough for them to get 15% earnings growth on revenue increases alone,” says Eric Berg, an insurance industry analyst for Lehman Brothers.

Moreover, a raft of competitors will be waiting for Mr. Benmosche to stumble. These have become more numerous and powerful with the passage of the Gramm-Leach-Bliley Act in 1999, the law that replaced the six-decades old Glass-Steagall Act and broke down barriers that had prevented banks, brokers and insurance companies to compete in one another’s businesses.

When Mr. Benmosche was preparing MetLife’s IPO, two bargain hunters, Sanford Weill, chairman of Citigroup, and Warren Buffett, chairman of Berkshire Hathaway, were reportedly interested in snapping up MetLife at a price that would have been considerably lower than the stock’s current valuation. These, and other potential acquirers, will be looking at MetLife if it becomes a bargain again.

“Gramm-Leach-Bliley — That’s the new world,” says Mr. Benmosche.

But he is as prepared as anyone to compete in it.

When Mr. Benmosche was 10 years old, his father died, leaving him, his three siblings, and his mother in precarious financial straits. They had an unfinished motel, which was $250,000 in debt, to complete and run in the resort town of Monticello, New York. When the Patio Motel was finished, Mr. Benmosche made the beds and operated the switchboard. The business survived, and as a teenager and young adult he continued to work hard, driving a Coca-Cola truck in the summers to save for college.

“He always had ambition,” says his uncle Julius Cohen, who worked with the family at the hotel. “Whatever he had to do he did to reach what he wanted.”

After graduating from Alfred University in 1966, where he met his wife, Denise, and where they both earned bachelor’s degrees in mathematics, he served for two years as an Army lieutenant in Vietnam and Korea, setting up field communications networks.

After leaving the Army he used his technical experience as a computer consultant with Arthur D. Little before joining Chase Manhattan’s systems group in 1975. Seven years later, he moved to Paine Webber, where he developed its checking and brokerage account package.

The project was successful enough to put Paine Webber in second place to Merrill Lynch in total account sales, and led to his becoming senior vice president of its marketing group in 1984. He was in charge of strategies to market IRAs, financial planning, retirement plans, money market funds, and insurance through the firm’s 4,500 brokers.

He later become chief financial officer of Paine Webber’s retail business, and then director of securities operations. His skills absorbing General Electric’s troubled Kidder Peabody unit into Paine Webber, and his experience in marketing and operations, caught the attention of Harry Kamen, then chief executive of MetLife, who hired him in 1995 as executive vice president.

Mr. Benmosche was a rare outsider in the 19th-century relic known by its employees as Mother Met. The company for years offered free lunches and nap time. It was formed in New York three years after the Civil War, from the remains of the National Union Life and Limb Insurance Company, to sell individual life insurance. Institutional business was added a decade later. In 1909, the Metropolitan Life Insurance Company built its headquarters, the Italian Renaissance-style skyscraper with a massive clock tower that is now a New York landmark.

In 1915 the Ecker family, which owned most of the company, turned Metropolitan Life into a mutual insurance company, transferring ownership to the company’s policy holders according to the value of their policies. It was the biggest change in the company’s history until Mr. Benmosche transformed MetLife into a public company last year.

With his twenty years as an executive in public financial companies, Mr. Benmosche was well prepared to transform the new MetLife, but there was also something inevitable about the IPO. By 1998, when Mr. Benmosche succeeded Mr. Kamen as MetLife’s chief executive, the walls separating the different categories of financial services — banking, brokerage, and insurance — were crumbling, and the passage in 1999 of the Gramm-Leach-Bliley Act eliminated them

“The future of financial services was being formed by other entities,” said Jack Dolan, a spokesman for the American Council of Life Insurance. “To get a seat at the table, we needed to make a change.”

Mr. Benmosche had to take MetLife public so he could raise capital more easily, make larger acquisitions, and compete with the publicly-owned banks, insurance companies, and brokerage firms that were leading the charge to capture a bigger slice of the financial services pie.

These included the established public powers like Citigroup, the American International Group, and Morgan Stanley Dean Witter, but also other life insurers that were venturing outside their shells for the first time, such as John Hancock Financial Services and Prudential Insurance Company of America. John Hancock eventually went public in January 2000, and Prudential has announced plans to do so this year.

Mr. Benmosche though wasted little time adapting. As he prepared to go public he began to reduce some of the expenses that were bane of the lumbering mutual company. Then in August, four months after MetLife’s IPO, he bought Grand Bank, a small bank based in Kingston, N.J., with $80 million of assets. Although the new MetLife Bank is tiny, it is designed to have the reach of much larger financial institutions.

“They don’t really need to have storefronts all over the place; they already have their agents all over the country,” said Carmen Effron, president of C.F. Effron Co., a bank insurance consulting firm in Westport, Conn.

The bank’s services will also be available to MetLife customers over the Internet.

“Met’s strategy is to use the bank to try to hold onto some of the $20 billion-plus dollars per year that it pays out in the form of benefits and claims payments to its customers,” says Caitlin Long, an insurance analyst at Credit Suisse First Boston. “It fits into the vision that Benmosche has of increasing the penetration into the customer base.”

That vision starts with MetLife’s primary businesses, its individual and insurance divisions, which will push MetLife’s distribution system harder. They plan to push distributors like Merrill Lynch, for example, which has had a selling agreement with MetLife for years, but has never been a big seller of MetLife annuities.

MetLife also wants to develop newer, more competitive variable life insurance, long-term care insurance, and other insurance products for existing customers to buy. The company is also integrating its New England Mutual Life Insurance Co. and General American Life Insurance Co. divisions to tap into their product-development capabilities.

On the institutional side, Mr. Benmosche is going after smaller and mid-size companies with which MetLife has done little business so far. It will also try to do more with larger companies, such as selling accidental death and dismemberment benefits in addition to basic life and short-term disability coverage.

To make its sales pitches more successful, MetLife will concentrate on providing more expert services to large companies and hire benefits staff specializing in middle- and small-market companies.

In short, MetLife’s strategies are centered on its core businesses. “We can’t afford to be in any hobbies,” says C. Robert Hendrickson, president of MetLife’s institutional business.

Mr. Benmosche is nonetheless interested in looking outside the company for growth and, whatever MetLife’s shortcomings, he has huge resources behind him to make things happen. In addition to an almost universally recognized brand, MetLife has assets of $423 billion, among the most of any financial company, and it is the leader in its field with $1.7 trillion dollars of life insurance in force.

But he said he intends to be careful.

“Whatever acquisitions we make will be large,” he says. “We won’t make any acquisitions that drive our stock down.”

Nevertheless, the company, with its flabby 9.5% return on equity, is not the portrait of a razor-sharp aggressor. Mr. Devine is particularly critical of MetLife’s real estate holdings.

“Bob has fallen in love with the properties,” he says. “That’s a common issue for CEOs — they all want to be Donald Trump. But the investors bought a financial services company, not a real estate developer. The real estate should have been gone before they went public.”

Still, while Mr. Benmosche has not managed to satisfy everyone, he has not tripped himself up either. “Management has done everything they told the Street they would do, and nothing they told the Street they would not do,” said Ms. Long. “I think Met expects to be a player in financial-sector M&A.” Mr. Benmosche said he recognizes that he has a lot of work to do — and that to stay competitive, MetLife must keep changing. “A big product of the whole demutualization was an enormous self confidence in our company,” he said. “We want to transform our culture, so people feel empowered and have the freedom to act.”

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