(Bloomberg) -- MetLife Inc., the life insurer that is reshapingits business mix to limit government oversight, is in talks withMassachusetts Mutual Life Insurance Co. about a possible sale ofMetLife Premier Client Group, the company’s U.S. adviser force.

The group targets middle- to upper-income consumers, includingsmall-to-medium sized company executives and small business owners,according to a regulatory filing. There is no guarantee that atransaction will be consummated, New York-based MetLife saidThursday in a statement.

MetLife Chief Executive Officer Steve Kandarian is weighing thepossible sale, spinoff or public offering of a U.S. retail unitafter his company was declared by regulators as a systemicallyimportant financial institution, a too-big-to-fail designation thatcan bring tighter capital rules. A separate U.S. proposal forstricter rules on retirement-product sales is pushing some insurersto evaluate whether they keep broker-dealer operations. AmericanInternational Group Inc. said last month that it was selling AIGAdvisor Group to funds affiliated with Donald Marron’s LightyearCapital LLC and PSP Investments.

“MET could see some relief from the likely need to altercommission and fee arrangements in response to likely Department ofLabor implementation of new fiduciary standards,” PiperJaffray Cos. analysts led by John Nadel said in a note. “Generallyspeaking, exiting the career agency, or owned distribution channel,would negate any conflicts, perceived or actual, from being both a‘manufacturer’ of product as well as a distributor.”

Direct sales

MetLife has been seeking to increase direct sales through theInternet and also offers products through workplaces. The insurerstruck a deal in 2013 to sell two broker-dealer affiliates to afirm backed by Lightyear. And Eric Steigerwalt, who was designatedto lead the U.S. retail operation slated for separation, has beencutting advisers in recent years.

“We’re not financing advisers who, frankly, were never going tomake it in this business,” Steigerwalt said in 2013. “Ourproductivity is way up and we’re saving a lot of money.”

He sought to push advisers to sell more car and residentialcoverage, which is less capital intensive than some retirementproducts. MetLife plans to keep its property-casualty unit, whichsells auto and home insurance.

MassMutual said in a separate statement that it entered intodiscussions about a possible deal and that “no timetable has beenset for any agreement.” The Wall Street Journal reported earlierThursday on the Springfield, Massachusetts-based company’s talkswith MetLife.

MassMutual would probably be able to cut real estate costs bycombining its 5,500 agents with 4,000 from MetLife, Nadel said.

Agent recruiting

“It’s no secret a career agency system is an expensiveproposition given the high fixed costs associated with officespace, training, compliance, etc.,” he wrote. “Moreover, new agentrecruiting continues to decline nationwide and agent retentionlevels remain relatively weak.”

MetLife gained 14 cents to $38.70 at 9:31 a.m. in New York,narrowing its decline for the year to 20%. MassMutual is owned byits policyholders.

Kandarian’s company recently lost a distribution relationship onsome retirement products. A spokesman for Fidelity Investments saidWednesday that it suspended sales of MetLife’s annuities given the“limited information available at this time” about the insurer’splan to separate a U.S. retail business.

--With assistance from Sonali Basak and Lily Katz.

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