) reported fourth quarter operating earnings per share of $1.31,
modestly ahead of both the Zacks Consensus Estimate of $1.24 and
$1.18 recorded in the year-ago quarter. Operating earnings
escalated 17% year over year to $1.4 billion.
During the reported quarter, operating earnings per share were
adversely affected by net investment losses of 52 cents and other
adjustments of 48 cents. These were partially offset by net
derivative gains of 55 cents per share, tax benefit of 18 cents and
income from discontinued operations of 2 cents.
Consequently, GAAP net income spiked to $1.13 billion or $1.06
per share as compared with only $51 million or 5 cents per share in
the prior-year quarter.
The upside was primarily due to a robust growth in the
International business segment, improved underwriting results as
well as higher demand for variable annuities, net investment income
and higher-than-expected derivative gains. This was partially
offset by lower-than-expected performance at its U.S. business
segment along with higher expenses. During the reported quarter,
MetLife's total expenses ascended 19.8% year over year to $15.22
Total operating revenue for the reported quarter increased 19%
year over year to $16.41 billion and also beat the Zacks
Consensus Estimate of $14.6 billion. Besides, total revenue surged
32% year over year to $16.75 billion. MetLife's premiums grew 27.1%
year over year to $9.17 billion, led by the ALICO acquisition. Fee
revenue substantially rose 15.5% to $1.95 billion, while net
investment income inched up 3.6% year over year to $4.94
Total operating earnings from the
improved 4% year over year to $932 million, given the favorable
underwriting results in group life and non-medical health. The
upside was attributable to higher earnings from Insurance and Auto
& Home fields, partially offset by reduced earnings from
Retirement Products and Corporate Benefit Funding (CBF). The U.S.
business premiums, fees and other revenues climbed 7% year over
year at $7.6 billion driven by modest premium growth in CBF coupled
with higher fee revenue in Retirement Products.
Besides, operating earnings jumped 33% in Insurance Products
coupled with 9% growth in Auto & Home driven by lower
catastrophes. The net written premiums in Auto & Home edged up
2% year over year to $740 million. However, operating earnings
witnessed a 5% dip in Retirement Products and a 21% plunge in the
CBF based on lower variable investment income.
segment's operating earnings shot up 89% year over year to $570
million. The results reflect robust performance after the ALICO
acquisition coupled with growth in Latin America, Middle East and
Japan. Besides, a 16% year-over-year sales growth was witnessed in
Japan while 12% growth was witnessed across all international
operations. Japan contributed about 57% to the International
segment's operating earnings, driven by reduced claims, higher
investment income, solid underwriting and improved persistency.
Corporate & Other
operating loss was recorded at $104 million, far wider than a loss
of $2 million in the prior-year quarter, based on higher
Meanwhile, the company has divested most of the business of
and hence, this segment has been excluded from the reported
Full-Year 2011 Highlights
For full-year 2011, MetLife recorded operating net income of
$5.36 billion or $5.02 per share as compared with $3.83 billion or
$4.31 per share in 2010. Earnings per share also came in
substantially higher than the Zacks Consensus Estimate of $4.91 per
During 2011, operating earnings per share were adversely
affected by net investment losses of 81 cents, other adjustments of
$1.54 and tax expense of 79 cents. These were partially offset by
net derivative gains of $4.52 per share and income from
discontinued operations of 2 cents. As a result, GAAP net income
came in at $6.71 billion or $6.29 per share against $2.67 billion
or $3.00 per share in the prior year.
Total operating revenue for the reported quarter jumped 27% year
over year to $65.38 billion and also exceeded the Zacks Consensus
Estimate of $59.7 billion. Besides, total revenue substantially
surged 34.4% year over year to $70.26 billion. However, MetLife's
total expenses shot up 24.6% year over year to $60.24 billion.
MetLife's net investment income increased 11% year over year to
$4.9 billion, while net investment portfolio loss was $213 million,
down from a year-ago gain of $6 million. The company's total
investment portfolio also escalated to $493.55 billion at the end
of 2011, up from $448.39 billion at the end of 2010, primarily due
to the influx of ALICO.
Besides, derivative gains surged to $351 million in stark
contrast to a loss of $1.1 billion in the year-ago quarter. The
upside was driven by declines in interest rates and gains in the
company's variable annuity hedging program, under which variable
investment income grew to $247 million in the reported quarter from
$243 million in the year-ago quarter.
As of December 30, 2011, MetLife's book value per share
excluding AOCI increased 13% year over year to $49.02. Reported
book value (including AOCI) per share escalated 24% to $54.59
versus $44.18 at the end of the year-ago period.
At the end of 2011, MetLife has total investments of $511.43
billion, up from $460.31 billion at 2010-end. However, cash and
cash equivalents declined to $10.46 billion, while total assets
increased to $799.63 billion, long-term debt reduced to $23.69
billion and total equity increased to $60.17 billion, from
Outlook for 2012
On December 5, 2012, MetLife announced its projected operating
earnings growth to be about 7% year over year in 2012, which is
guided in the range of $5.1-5.6 billion or $4.80-5.20 per share
based on average shares outstanding of about 1.07 billion. This
guidance does not assume share buybacks, which is likely to perk up
earnings per share.
Management further evaluated a 5% growth in premiums, fees and
other revenues, in the range of $47.3-48.6 billion, for 2012.
As ALICO has amplified the company's international presence
substantially, in November 2011, MetLife also restructured its
revenue streams into three business units to capitalize on
(Europe, Middle East, and Africa). Earlier, the company was divided
geographical regions. Going ahead, management estimates revenue to
grow by about 20% per year through 2015 in Brazil, Russia, India
On December 14, 2011, the board of MetLife paid a regular
quarterly dividend of 74 cents per share to shareholders of record
as on November 9, 2011.
On January 10, 2012, MetLife announced the pack up of its
forward residential mortgage business, which originated under
MetLife Home Loans, which is the residential mortgage division of
MetLife Bank. However, MetLife Home Loans will honor the majority
of its contractual loan commitments, most of which are expected to
be off the record within 3 months, thereby continuing to serve its
current reverse mortgage originations.
Meanwhile, MetLife projects to incur costs of $90-100 million,
scheduled for 2013. However, we expect increased compensation and
benefit expenses over time, given the bulk of lay offs.
On December 27, 2011, MetLife agreed to sell its bank deposits
worth $7.5 billion to GE Capital - the financial services unit of
General Electric Co.
). The deal is expected to culminate by the end of the first half
of 2012, subject to regulatory approvals. As of September 30, 2011,
MetLife Bank deposits stood at $10.7 billion. Accordingly, the
transition services agreement entered into by MetLife Bank and GE
Capital include certificates of deposit and money market
On October 12, 2011, MetLife management had intimidated about
its decision to explore a sale of MetLife Bank's depository
business as well as its forward mortgage origination business.
Meanwhile, MetLife is also exploring the sale of the remaining
custodial deposits worth $3.0 billion in the upcoming months.
Besides, MetLife is likely to furnish a fresh capital plan to
the Federal Reserve (Fed) in early 2012, in order to hike dividends
and recommence stock buyback, thereby deploying its excess capital
efficiently. However, in October last year, the Fed had rejected
the company's plan based on the size and scale of its bank
operations and has been since then closely and strictly supervising
MetLife. This also explains the company's rapid divestment or shut
down of most of its banking operations.
Besides, MetLife's prime peer,
American International Group Inc.
), is expected to release its fourth quarter financial results
after the market closes on February 23, 2012.
Meanwhile, on February 8, 2012, another close competitor,
Prudential Financial Inc.
) reported core operating earnings for the fourth quarter of $1.97
per share, substantially higher than the Zacks Consensus Estimate
of $1.76. Results were positively impacted, primarily by a
three-fold increase in International earnings, led by Japan
acquisitions earlier during the year. Full year 2011 earnings of
$6.41 per share surpassed the Zacks Consensus Estimate of
AMER INTL GRP (
): Free Stock Analysis Report
GENL ELECTRIC (
): Free Stock Analysis Report
METLIFE INC (
): Free Stock Analysis Report
PRUDENTIAL FINL (
): Free Stock Analysis Report
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