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Shares of MetLife Inc. (MET - Analyst Report) unexpectedly dipped 0.8% to $47.21 following its Sep 26 announcement to form a life insurance joint venture (JV) with Bank for Investment & Development of Vietnam (BIDV) and Bank for Investment and Development of Vietnam Insurance Corporation (BIC). The JV is scheduled to be functional in 2014.

Per the agreement, the JV is expected to be armed with a capital of VND 1.0 trillion ($48 million). Initially, the operational strategy is devised around providing life and health insurance products in Vietnam through the JV, 60% of which will be owned by MetLife. The remaining 40% will be held by BIDV and BIC.

MetLife also stands to gain from its participation in the JV, given an additional agreement for distribution of insurance products through the bank (or bancassurance) between the JV and BIDV. The decision of the JV tails from the Memorandum of Understanding (MoU) signed in Jul 2013.

The JV deal is expected to complement the expansion needs of MetLife, BIDV and BIC. BIDV and BIC’s strong clientele will get a strong support from the financial reliability and global brand awareness that MetLife holds. BIDV enjoys an operational network of over 600 branches across Vietnam.

On the other hand, MetLife’s customer-centric business model should further help it penetrate into emerging economies such as Vietnam. The global insurance company estimates emerging economies to contribute about 20% to its earnings by 2016, up from 14% in 2012. This reflects MetLife’s firm conviction of growth from international operations.

Hence, we believe that the JV with BIDV and BIC in Vietnam fits well with MetLife’s long-term growth strategy. The company’s consistent focus on realigning its business portfolio to cater to market demand and enhance international growth should drive its operating leverage going forward.

While MetLife carries a Zacks Rank #3 (Hold), outperformers in the insurance sector include American International Group Inc. (AIG - Analyst Report), Prudential Financial Inc. (PRU - Analyst Report) and Cigna Corp. (CI - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).

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