Metlife buys mortgage company First Horizon
June 6, 2008
Metlife, the insurance giant, is making a bet that the housing market is bottoming out by purchasing residential mortgage lender First Horizon. This purchase comes on the heels of their recent pick-up of reverse mortgage lender EverBank Financial. I think they’re crazy to jump in at this point, but I don’t have a team of over-paid analysts, so what do I know. If they have cash to burn short-term they may find some long-term advantage, but to me the risks seem severe at this point.
From Bloomberg on the purchase:
MetLife Inc., the largest U.S. life insurer, agreed to buy a residential mortgage business from First Horizon National Corp., expanding its bet on the U.S. housing market.
The purchase includes the home loan unit of First Horizon’s Tennessee Bank National Association outside of that state, with 230 offices in the U.S., the New York-based insurer said today in a statement. MetLife said it isn’t acquiring any subprime or Alt- A mortgages in the purchase. Terms weren’t disclosed.
MetLife is expanding its banking services after agreeing in April to buy a reverse mortgage specialist from Jacksonville, Florida-based EverBank Financial Corp. Life insurers including No. 2 Prudential Financial Inc. and Principal Financial Group Inc. reiterated last month their strategies of investing in mortgages even after the meltdown of the subprime home market prompted writedowns and stock drops.
“They’re probably calling a bottom on prices or close to it,” Alan Devlin, an analyst with Atlantic Equities LLP in London, said of MetLife in an interview. “It does tell you that they are willing to step in and make investments and confident enough in their capital levels.”
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