The departure of Jamie Shepherdson and Greg Brakovich as co-CEOs of MetLife Investors signals that MetLife Inc. has lost patience with its unit that distributes investment and insurance products through third-party channels, according to industry analysts.
Their decision to leave, along with chief financial officer Mark Brandenberger, came as revenues have been sluggish at the Newport Beach, Calif., unit while Mr. Shepherdson and Mr. Brakovich undertook high-cost business moves like their sales alliance with Merrill Lynch & Co. last spring, the analysts noted.
MetLife has named Mike Farrell, who heads New York-based MetLife Resources, the division that sells annuities in the not-for-profit, educational, and health-care markets, to take over as CEO of MetLife Investors today, according to spokesman John Calagna. Mr. Farrell will remain head of MetLife Resources, he said. The parent company has no plan to bring the two units together, Mr. Calagna said.
MetLife Investors has also appointed a new chief financial officer, Jim Bossert, who was a deputy comptroller in MetLife's corporate comptroller department.
The departures came less than two months after MetLife Investors slashed its bank-dedicated wholesaler force from seven to three.
MetLife Inc., the New York-based parent, was interested in making MetLife Investors a more traditional unit, an analyst said. Mr. Brakovich and Mr. Shepherdson had run the unit almost autonomously for the past year, but with its profits declining after a difficult quarter, MetLife wanted to change their approach to the banking channel, according to the analyst.
"No one likes being expected to do the same job with less resources," this analyst said. "Everyone saw the writing on the wall. The future was and is going to be difficult at MetLife" Investors.
In the first quarter, MetLife Investors sold $133 million worth of annuities through banks, placing it 19th overall, according to data from Kenneth Kehrer Associates in Princeton, N.J. Last year the unit had sold $388 million of annuities, for 21st place.
However, MetLife Investors did have $1.5 billion of annuity sales through all channels in 2001, mostly through broker-dealers. And in March it agreed to sell variable annuities through Merrill Lynch in a deal Mr. Brakovich said at the time could propel annuity sales to more than $3 billion this year.
"I can't believe they were making money with the money they were spending," another analyst said. "And they got into Merrill Lynch, but what did that cost them? It costs a lot of money, an absolute fortune, to get into Merrill Lynch."
The split appears to be amicable, said four analysts questioned on the situation. "They did not want to be sucked into the corporate culture," one of them said, "which makes sense since they've stayed out in Newport Beach the whole time. They were getting sucked into the MetLife fold."
"Their reputation has always been that they spend a lot of money," this analyst said.
Mr. Shepherdson and Mr. Brakovich's decision to leave, paired with MetLife's decision to slash its wholesaler force, left some analysts asking whether the company is reining in its bank-channel operations.
But Mr. Calagna dismissed that idea. "MetLife is committed to the bank channel," he said. "We will increase our sales through banks. Mike will lead us forward. He's been in the industry for the last 25 years and has been with us for the last year."
Mr. Shepherdson and Mr. Brakovich joined MetLife together in 2000 from Los Angeles-based Equitable Distributors Inc., a division of the insurance giant Axa. The two of them had helped start Equitable Distributors in 1996, and assets under management grew to $6 billion in four years.
They joined MetLife as co-CEOs of Los Angeles-based Security First Group, the unit of MetLife that distributed and manufactured investment products through intermediaries, including banks. A year later, the two helped start MetLife Investors, which replaced Security First, to help expand third-party distribution.
MetLife announced the two executives' departure internally on Wednesday. Phone calls to Mr. Shepherdson's home in Newport Beach were not returned.
