MetLife's second-quarter earnings missed both the Zacks Consensus
Estimate and the year-ago quarter based on higher expenses and
weakness in Asia. Volatile investment returns and weak variable
annuities also weighed on ROE, although debt reduction should
improve leverage. A tepid growth guidance, challenging interest
rates, currency fluctuations and competition were other headwinds.
However, improved performance in Americas and EMEA along with
higher derivative losses in the year-ago quarter supported growth.
MetLife's capital position remains one of the sturdiest in the
industry, cushioned by a diversified portfolio mix and a leading
brand, as reflected in its healthy ratings and the latest dividend
hike and resumption of share buybacks. Going ahead, consistent
focus on international growth should enhance operating leverage,
increasing MetLife's potential to outperform the peer group,
thereby justifying our Neutral recommendation.
Founded in 1868 and headquartered in New York, MetLife, Inc. is
a leading provider of insurance and financial services to a broad
spectrum of individual and institutional customers. Through its
various subsidiaries and affiliates, the company provides
individual insurance, annuities, and investment products. The
company also offers group insurance as well as retirement &
savings products and services to corporations and other
institutions. Through its domestic and international subsidiaries
and affiliates, MetLife serves more than 90 million customers in
over 60 countries around the world. Based on life insurance
in-force, it is the largest life insurer in the U.S. Some of its
prominent subsidiaries and affiliates include Gen America, State
Street Research, Metropolitan Property and Casualty, and Texas
Life. Outside the U.S., the company serves customers through direct
insurance operations in Japan, Latin America, Asia Pacific, Europe
and the Middle East.
Since the first quarter of 2012, MetLife reported results under
its new regionally distributed segments: The Americas (including
the U.S. and Latin America) contributed 76% to the revenues in
2013, while Asia and EMEA (Europe, the Middle East and Africa)
contributed 18% and 5%, respectively. The new segregation is based
on the company's expansion into 64 countries with the ALICO
acquisition, up from 17 countries previously. Additionally, MetLife
is also creating a new global employees benefits unit under the
Corporate & Other segment (1%).
Significantly, on Nov 1, 2010, the company acquired American
Life Insurance Company (ALICO) unit of AIG for $16.4 billion. The
payment made to AIG consisted of $7.2 billion in cash and $9.0
billion in MetLife equity and other debt securities. ALICO is a
leading provider of life insurance, accident and health insurance,
retirement and wealth management solutions to consumers and
Further, on Apr 1, 2011, MetLife sold half of its stake in
Japan-based Mitsui Sumitomo MetLife Insurance Co. to its joint
venture partner MS&AD Insurance Group Holdings Inc. for $267
million ( 22.5 billion) in cash. Alongside, on Nov 1, 2011, MetLife
disposed of MetLife Taiwan Insurance Company Limited, in a
third-party sale, for $180 million. Further, on Nov 9, 2011,
MetLife approved the sale of its Caribbean operations to
Pan-American Life Insurance Group, which was closed in 2012.
Additionally, MetLife divested its banking business in parts,
based on the stringent regulations attached and a consistent
operating underperformance. Accordingly, on Jan 10, 2012, MetLife
announced the closure of its forward residential mortgage business,
which originated under MetLife Home Loans. The termination in turn
is projected to lay off about 4,300 employees associated with this
On Jan 30, 2012, MetLife announced a contract to acquire the
life insurance and pension businesses of London-based Aviva plc in
Eastern Europe regions of Hungary, Romania and Czech Republic.
These three European units up for sale had total assets of 57
million ($75 million) and accounted for less than 0.5% of total
profits of Aviva at Jun 2011-end. The transaction was culminated in
On Feb 9, 2012, MetLife further agreed to vend its Warehouse
Finance business to the financial firm EverBank Financial Corp. The
deal was culminated in the first half of 2012 with undisclosed
terms and conditions.
On Apr 26, 2012, Nationstar Mortgage LLC agreed to purchase
MetLife Bank's reverse mortgage servicing portfolio for net worth
of $25 million. The transaction was closed in Jun 2012. Further, in
Jan 2013, MetLife Bank closed the long-pending deal with General
Electric Co.'s financial services unit GE Capital Retail Bank and
sold its bank deposits worth $6.4 billion, which included
certificates of deposit and money market accounts. MetLife also
vended its mortgage-servicing portfolio to JPMorganChase Bank.
In Feb 2013, MetLife de-registered itself as a bank holding
company after receiving due approval from the Federal Reserve and
the Federal Deposit Insurance Corp. (FDIC). Henceforth, MetLife
Bank is a divested operation.
In Sep 2013, MetLife formed a life insurance joint venture (JV)
with Bank for Investment & Development of Vietnam (BIDV) and
Bank for Investment and Development of Vietnam Insurance
Corporation (BIC). The JV is scheduled to be functional in
In Oct 2013, MetLife culminated the purchase of 64.3% of the
pension-management wing of Banco Bilbao Vizcaya Argentaria SA
(BBVA) AFP Provida SA based in Chile. The transaction was valued at
$1.3 billion along with dividends from AFP of about $230 million.
Net capital gains of about 500 million euros ($676.28 million) are
also projected from the deal.
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