LONDON, Dec 3 (Reuters) - Italian insurer Assicurazioni Generali has held talks with U.S. rival MetLife Inc to buy the bulk of its European assets but discussions have stalled due to differences over price, four sources told Reuters.
Generali, which ranks as Europe's third biggest insurer, first approached MetLife earlier this year offering to take on most of its underperforming European business whose adjusted earnings slipped 4% in the third quarter, the sources said.
But talks dragged on for more than six months and were hampered by management changes at MetLife, where Michel Khalaf became the New York-based insurer's new boss in May, they said.
Representatives at Generali and MetLife declined to comment.
Two of the sources said Generali remained interested in hoovering up a significant chunk of MetLife's European portfolio, including operations in Britain, France, Italy and eastern Europe, but no agreement could be reached.
They said the price and structure of the deal were the main stumbling blocks and ruled out any progress by the end of the year.
MetLife's Khalaf emailed staff in late November saying there were no live discussions with the Italian insurer after media reports first emerged.
"Negotiations have been on and off for months. There are still many aspects of the deal that need fine-tuning including the valuation," a source familiar with the discussions said, ruling out any near-term agreement.
Generali has about 3 billion euros ($3.31 billion) for acquisitions, under its latest strategy plan, and its French boss Philippe Donnet is looking at several dossiers, according to a source close to the situation.
Any deal must come at a fair price and unlock significant synergies, this source said.
Generali wants to boost its presence in certain European countries to drive earnings after pulling back from non-core markets including Belgium and the Netherlands last year.
MetLife operates in 26 countries across Europe, the Middle East and Africa (EMEA), offering life, accident, health and credit insurance, as well as pension products.
The U.S. insurer runs the bulk of its European assets out of Ireland where its main subsidiary - MetLife Europe d.a.c. - has operations in 11 countries including Britain, Italy, Spain and France.
MetLife controls three other subsidiaries active in Europe and known as MetLife Europe Insurance d.a.c., MetLife Greece S.A. and MetLife TUnZiR in Poland.
The sources said Generali had carried out due diligence on all the divisions, aiming to buy most of the operations including activities in Greece and Poland. But MetLife was reluctant to sell its entire European portfolio unless the price was compelling.
Another source familiar with Generali's strategy said the Trieste-based company was still looking at MetLife's businesses, but said Generali would only resume efforts to negotiate a deal after its annual results due on March 14, 2020.
The source said that although things were moving slowly the talks could gain traction next year.
Investors are expected to quiz MetLife on its plans for Europe at a New York investor conference on Dec. 12.
MetLife's EMEA business is the smallest of the U.S. group's five businesses, with adjusted earnings of $277 million in 2018, compared with $2.8 billion for its U.S. operations and $5.6 billion for the group.
Insurers in Europe such as Old Mutual, Prudential and Standard Life have been streamlining their businesses via disposals and mergers to grapple with tougher regulatory scrutiny, low interest rates and fierce competition.
French insurer AXA is also considering selling its central European business as part of a restructuring to quit markets where it lacks scale, Reuters reported in October. ($1 = 0.9073 euros) (Reporting By Pamela Barbaglia and Carolyn Cohn in London; additional reporting by Gianluca Semeraro, Valentina Za and Stephen Jewkes in Milan and Suzanne Barlyn in New York. Editing by Jane Merriman)