Last Thurs­day, the Pan-Amer­i­can Life In­sur­ance Group (PALIG), an­nounced the com­ple­tion of the ac­qui­si­tion of the as­sets and busi­ness­es of Amer­i­can in­sur­ance gi­ant MetLife in the Cay­man Is­lands, Cos­ta Ri­ca, Pana­ma, St Lu­cia and Trinidad and To­ba­go. For decades, the com­pa­ny that Pan-Amer­i­can ac­quired in T&T op­er­at­ed as Al­gi­co, and Jose Su­quet spent much of last Thurs­day ad­dress­ing over 500 Al­gi­co em­ploy­ees, agents and man­agers at two sep­a­rate meet­ings at the Hilton.

Al­though clear­ly tired from spend­ing the day talk­ing to Pan-Amer­i­can's new em­ploy­ees about the in­sur­er's vi­sion for them and their com­pa­ny, Su­quet is al­so qui­et­ly ex­hil­a­rat­ed that the con­ver­sa­tion with his new staffers went so well. "The ti­tle of the pre­sen­ta­tion was New Be­gin­nings and we were com­mu­ni­cat­ing the strat­e­gy, strengths and val­ue propo­si­tion of Pan-Amer­i­can to cus­tomers, dis­trib­u­tors, agents and em­ploy­ees," said Su­quet. More specif­i­cal­ly, he spoke to the new em­ploy­ees of Pan-Amer­i­can about the com­pa­ny's growth plans, the strate­gic ra­tio­nale for the ac­qui­si­tion and the rea­sons that the com­pa­ny "presents such a com­pelling op­por­tu­ni­ty for our cus­tomers em­ploy­ees and agents."

In tak­ing over the Al­gi­co as­sets and busi­ness, Pan-Amer­i­can gets a sales force of 265 agents and man­agers and 240 em­ploy­ees, which, to­geth­er with agents and em­ploy­ees in the oth­er ter­ri­to­ries, means that the US-based com­pa­ny now has 1,300 em­ploy­ees and 3,000 agents and man­agers world­wide. Pan-Amer­i­can ac­quired MetLife Al­gi­co unit in T&T, along with Amer­i­can Life In­sur­ance Com­pa­ny (Al­i­co) branch­es in Bar­ba­dos, Cay­man Is­lands and most of the East­ern Caribbean as well as the Al­i­co op­er­a­tions in Pana­ma and Cos­ta Ri­ca. When Pan-Amer­i­can re­ceives reg­u­la­to­ry ap­proval for the rest of the ac­qui­si­tion of MetLife's busi­ness­es in Cen­tral Amer­i­ca and the Caribbean-which Su­quet will come by at the end of the year-the com­pa­ny would have added 15 coun­tries, 350,000 new cus­tomers, about US$675 mil­lion in as­sets and US$170 mil­lion in rev­enues (as of 2010). Speak­ing about the process of re­ceiv­ing reg­u­la­to­ry ap­proval in T&T, Su­quet said of the In­spec­tor of Fi­nan­cial In­sti­tu­tions, Carl Hi­ralal, and his team: "They were very ef­fi­cient, very thor­ough and very pro­fes­sion­al and asked all the right ques­tions. It was very im­por­tant that T&T got im­proved be­cause this coun­try serves as the hub of the Caribbean. We re­al­ly could not close the oth­er is­lands if we did not close Trinidad. "The reg­u­la­tor Mr Hi­ralal and the staff there are as good as we have seen in any ju­ris­dic­tion." For Su­quet, the ac­qui­si­tion of the MetLife/Al­i­co as­sets was a per­fect fit for Pan-Amer­i­can-both in terms of the size and the na­ture of the busi­ness­es. Last year, Pan-Amer­i­can's rev­enues grew by 9.8 per cent to US$470 mil­lion com­pared with 2010, while its net in­come for last year was US$30.7 mil­lion, which was an 11.5 per cent im­prove­ment over 2010. Su­quet said Pan-Amer­i­can was cho­sen by MetLife to ac­quire its Cen­tral Amer­i­can and Caribbean as­sets-rather than one of the Caribbean in­sur­ance gi­ants like Sagi­cor or Guardian Hold­ings-be­cause he spot­ted the op­por­tu­ni­ty ear­ly. "This was my brain­child back in Au­gust 2008 when the Unit­ed States gov­ern­ment took over AIG-the par­ent com­pa­ny of Al­i­co and Al­gi­co-it was im­me­di­ate­ly said that in or­der to start pay­ing the gov­ern­ment back they would have to sell some of their as­sets or take some com­pa­nies pub­lic." The US gov­ern­ment bailed out AIG to the tune of over US$80 bil­lion in 2008, in a trans­ac­tion that caused tremors in mar­kets through­out the globe be­cause of the size and im­por­tance of AIG, which was the even­tu­al par­ent com­pa­ny of all of the as­sets ac­quired by Pan-Amer­i­can Life.

Su­quet said he called AIG and the CEOs of the four com­pa­nies that were ru­moured to be in­ter­est­ed in Al­i­co. "I pre­sent­ed to them our log­ic that they were even much larg­er com­pa­nies than Al­i­co and some of these small­er coun­tries would not rep­re­sent a ma­te­r­i­al event for them. They had to fo­cus their ef­forts on the much larg­er coun­tries." He ex­plained to his coun­ter­parts from these much larg­er in­sur­ance com­pa­nies why Pan-Amer­i­can was the ob­vi­ous choice to ac­quire the Al­i­co busi­ness in the re­gion. "When MetLife won the bid­ding process for Al­i­co, we fol­lowed up and they were very in­ter­est­ed in sell­ing (Cen­tral Amer­i­ca and the Caribbean)," said Su­quet. In March 2010, MetLife Inc an­nounced that it was pur­chas­ing Al­i­co for US$15.5 bil­lion in a trans­ac­tion that gave it beach­heads in 47 na­tions from Pe­ru to Bangladesh. He said MetLife sold the Al­i­co op­er­a­tions in Venezuela and Pe­ru to lo­cal part­ners and de­cid­ed to keep the op­er­a­tion in Colom­bia, but was open to the idea of sell­ing the rest of Cen­tral Amer­i­ca and the Caribbean. Su­quet said: "We were the per­fect part­ner be­cause of our ex­pe­ri­ence, our cul­ture in­ter­na­tion­al­ly and the depth of our man­age­ment team. And we had the fi­nan­cial where­with­al and the bal­ance sheet strength to pull this off." He said both par­ties de­cid­ed not to dis­close the ac­qui­si­tion cost be­cause it was not a ma­te­r­i­al event for MetLife. "As the sell­er, MetLife has the right to not want to dis­close the de­tails and for us it would have made no dif­fer­ence but we had to re­spect the wish­es of the sell­er," Su­quet said. The Pan-Amer­i­can chair­man and CEO de­scribed his com­pa­ny as a pure in­sur­ance play and said that it main­tains a dis­ci­plined fo­cus on life in­sur­ance and health in­sur­ance. "We don't have a gen­er­al in­sur­ance com­pa­ny. We don't sell prop­er­ty and ca­su­al­ty and we don't own a bank," said Su­quet.

Pan-Amer­i­can is dif­fer­ent from some in­sur­ers in an­oth­er way: its in­vest­ments are dom­i­nat­ed by fixed in­come in­stru­ments, which com­prise 92 per cent of its port­fo­lio. He said the com­pa­ny al­so does not mark its fixed in­come port­fo­lio to mar­ket, in­stead opt­ing to leave the un­re­alised gains or loss­es on the bal­ance sheet un­til they are sold. "We hap­pen to be sit­ting on rough­ly US$170 mil­lion of un­re­alised gains right now. Our mar­ket to book ra­tio is ap­proach­ing 113 per cent so we have a tremen­dous cush­ion there in case of ris­ing in­ter­est rates and the bond port­fo­lio drops in val­ue," Su­quet said. He said the com­pa­ny de­cid­ed to ex­it eq­ui­ties, sell­ing 50 per cent of its shares in 2007 and the rest at the be­gin­ning of 2008 and lat­er in 2008 be­cause of the volatil­i­ty of eq­ui­ties. "The is­sue with eq­ui­ties on the ac­count­ing side is that if they are un­der wa­ter, the com­pa­ny has to im­pair them. Bonds are dif­fer­ent as you have cer­tain lee­way with bonds as you can go 80 per cent mar­ket-to-book if there is a method­ol­o­gy or ra­tio­nale for why you feel the bond would be okay," said Su­quet. On the is­sue of the Al­gi­co name and brand­ing, Su­quet points out that Pan-Amer­i­can, which cel­e­brat­ed its 100th an­niver­sary last year, owns 82 per cent of the com­pa­ny and, there­fore, is oblig­ed to call a share­hold­ers' meet­ing to dis­cuss those is­sues. He al­so said there would be some changes at the top of the or­gan­i­sa­tion. Miguel Sier­ra, the Pan-Amer­i­can Chief Fi­nan­cial Of­fi­cer, will be the man­ag­ing di­rec­tor of Caribbean op­er­a­tions and will be based in Port-of-Spain. Jac­in­to Mar­tinez will be the new vice pres­i­dent of agency dis­tri­b­u­tion, while Varun Kuars­ingh, a Trinida­di­an with years of in­ter­na­tion­al ex­pe­ri­ence, will be the com­pa­ny's new CFO.

Asked whether Pan-Amer­i­can would be in­ter­est­ed in ac­quir­ing the tra­di­tion­al port­fo­lios of Cli­co and British Amer­i­can, Su­quet said the com­pa­ny prefers to fo­cus on the in­te­gra­tion and growth of the re­cent ac­qui­si­tions rather than look for new pos­si­ble pur­chas­es. He al­so said that the in­sur­ance in­dus­try in the re­gion was "frag­ile" be­cause of the dam­age caused by the col­lapse of Cli­co and British Amer­i­can. In a state­ment last week, Su­quet said: "The re­gions ac­quired through this trans­ac­tion great­ly ex­pand PALIG's in­ter­na­tion­al rev­enues fur­ther mak­ing these mar­kets a pri­or­i­ty as the com­pa­ny con­tin­ues to ex­pand its glob­al foot­print. " In the Caribbean, the Al­i­co/Al­gi­co ac­quired pre­mi­ums rep­re­sent 11 per cent of PALIG's over­all pre­mi­um dis­tri­b­u­tion and 20 per­cent of its in­ter­na­tion­al port­fo­lio, thus mak­ing the Caribbean mar­ket one of the most im­por­tant for PALIG. "This trans­ac­tion aligns with our ded­i­cat­ed fo­cus on our core com­pe­ten­cies of life and health in­sur­ance. The ad­di­tion of the MetLife– Al­i­co/Al­gi­co busi­ness fits per­fect­ly with Pan-Amer­i­can Life's strate­gic fo­cus of be­com­ing a lead­ing life and health in­sur­ance car­ri­er with in­ter­na­tion­al reach for in­sureds of both our cor­po­rate and per­son­al lines," said Mr Su­quet. "Ad­di­tion­al­ly, it ranks PALIG in the top three among life and/or health in­sur­ance car­ri­ers in near­ly all mar­kets in which it com­petes out­side of the Unit­ed States."