The massive layoff that MetLife Inc. announced this week is probably the last of its kind for the foreseeable future, its chief executive officer said.
Any further staff cuts will come either by attrition or in dribs and drabs, Robert H. Benmosche said late Monday in a conference call.
The cuts of 1,900 people, about 4% of the work force have nothing to do with the Sept. 11 terror attacks, he said. Rather, the layoff reflects an economizing and streamlining strategy adopted when the New York insurer went public in April 2000, he said.
The 1,900 include 253 officer- and director-level employees, 10% of all at that rank. Of the 253, 158 were actually laid off in the third quarter.
The total also includes 640 nonsales people in the Individual Business division, which sells life insurance and other financial products to individuals; and about 340 operations and technology people who support that business.
The company will also cut 200 people in the MetLife Auto and Home operation as it integrates the personal lines property/casualty business it bought from St. Paul Cos. in 1999. Mr. Benmosche, who is also MetLifes chairman, said it is conducting a successful consolidation of the St. Paul book of business. Sixty percent of the policies have been converted to MetLife policies, and 91% of those policies were successfully retained, he said.
MetLife also plans to discontinue its stand-alone 401(k) record keeping services, and sell those accounts to Hewitt Associates for an undisclosed price. The 401(k) business, part of what MetLife calls its Institutional Business, handles corporate benefits plans. MetLife and Hewitt agreed to the sale in the third quarter, Mr. Benmosche said.
As a result of these actions, MetLife will take after-tax charges of about $12 million for the third quarter and $356 million for the fourth. Cuts in Individual Business will account for $117 million of the fourth-quarter charges, while Institutional Business cuts will account for $237 million, and Auto and Home $2 million.
MetLife expects savings from the job cuts to increase its 2002 after-tax operating earnings by more than $100 million.
The company also said that its insurance losses from the Sept. 11 attack would be less than it had announced on Sept. 14. The company now estimates third-quarter claims from the attacks will cost it about $210 million, or 27 cents per share, down from the $250 million to $300 million range 35 to 40 cents per share it had previously predicted.
MetLife also said it expects to report third-quarter per-share earnings of 29 to 31 cents, which will include the effects of the Sept. 11 claims, versus the 17-cent consensus estimate from analysts surveyed by Thompson Financial /First Call. The company is scheduled to post its earnings Nov. 6.
