Monday, April 30, 2012

Metlife Inc. Q1 2012 Earnings

Metlife Inc. reported Thursday morning on April the 26th. Net operating earnings were up year over year at $1.46 billion or $1.37 per share compared to $1.32 billion or $1.23 per share one year ago. However Metlife Inc. posted a net loss for the quarter of $174 million due to extraordinary items including $1.3 billion in derivative losses tied to credit spreads and interest rates. The stock declined in after hours on the news but rebounded Friday to recover a majority of the lost ground. International growth was strong, with operating earnings in China posting 33% growth year over year and sales in Japan grew by 28% year over year. Total sales for their entire Asian segment were up 15%, premiums, fees, and other revenues were up 8%. Their EMEA (Europe, Middle East, and South Asia) segment saw operating earnings fall 4% year over year due to unfavorable exchange rates and a difficult economic environment in Europe however despite the environment, premiums, fees, and other revenues grew by 9% in the segment. Latin America saw operating earnings up 33% year over year.

In the conference call management addressed the derivatives loss briefly only to say that “derivative gains and loses related to MetLife’s credit spreads do not have an economic impact on the company.” Management affirmed their direction to free Metlife Inc. of increased regulatory oversight levied though the previously announced sale of Metlife Bank to GE Capital, the spin down of their forward mortgage business, and the newly announced sale of Metlife Inc.’s reversed mortgage to Nationstar Mortgage LLC. While this is good news for the possibility of returning capital to shareholders management dodged questions stating that they could not read the regulators. Management declined to update or affirm 2012 projections. 

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