By Dow Jones Business News,
February 12, 2014, 04:30:00 PM EDT
By John Kell
MetLife Inc. said fourth-quarter net income soared as the life insurer reported a large net derivative loss a year
Operating earnings, which exclude gains and losses in MetLife's investment portfolio and from derivatives in its
hedging program, among other items were $1.56 billion, or $1.37 a share, compared with $1.37 billion, or $1.25 a share,
a year ago. Total operating revenue was relatively flat at $18.4 billion.
Analysts surveyed by Thomson Reuters had projected operating profit of $1.30 a share on $17.43 billion in revenue.
As for net income, MetLife reported fourth-quarter profit of $877 million. On a per-share basis, which includes the
payment of preferred dividends, profit was 77 cents a share, compared with 9 cents a share a year earlier.
The latest period had net derivative losses of $373 million, compared with $1.32 billion in such losses a year ago.
Like other insurers, MetLife uses derivatives to manage risks, including fluctuations in interest rates and currencies.
According to the company, accounting rules applied to the overwhelming majority of the derivatives in its hedging
program require recording the instruments at market value, with fair-value changes reported in net income. But the risks
being hedged aren't marked to market under accounting rules.
MetLife vastly broadened its international business with the 2010 purchase of an overseas life-insurance unit from
American International Group Inc. ( AIG ). The company has more recently sought an expansion in Southeast Asia.
MetLife and other large insurers have been lobbying for insurance-industry-tailored capital rules as federal
regulators more accustomed to overseeing banks step up their oversight of "systemically important" financial firms in
the wake of the 2008 financial crisis. MetLife hasn't yet been designated as systemically important, but it is widely
expected to receive that label in coming months.
Write to John Kell at email@example.com
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