Thursday, February 28, 2013

MET Q4 Earnings

     MetLife (MET) released fourth quarter and full year earnings. During the 4th quarter MetLife reported net income of $96 million, or $0.09 per share over consensus. The increase in net income was fuelled by increases in Operating earnings which totaled $1.4 billion, or $1.25 per share which represents a 10% increase over fourth quarter earnings last year. The operating earnings beat consensus of 1.2 billion or ($1.17) per share.  Growth was driven by a 21% increase over earnings in the Americas and a 26% increase in their (EMEA) segments. In addition MetLife also suffered a 24% loss in earnings in Asia due to an annual review of actuarial assumptions.

     For the full year of 2012, MetLife reported earnings of $5.7 billion, or $5.28 per share, which represents a 22% increase over 2011. These earnings beat consensus of $5.5 billion in revenue or ($5.25) a share. The overall operating earnings for the Americas increased 21% to $1.3 billion driven by funding in Latin America. MetLife took a $70 million dollar hit in losses due to Super storm Sandy; this was above the company’s quarterly plan provision. To offset losses MetLife increased their premium and fee amounts which overall are up $9.9 billion or 18%. Due to the calm nature of the rest of the year MetLife was able to offset the losses and finished with a 5% increase in revenue for Americas.

     Although MetLife reported positively on both the quarter and the full year results, it still did not perform up to expectations. The stock dropped 2.5% following the earnings announcement however some of the drop was alleviated with news that MetLife is no longer a bank holding company. MetLife has been fighting for the past few years to drop its bank holding division and they were finally approved by the FDIC on Feb 14. MetLife sold off its main Bank’s depository business to General Electric Capital on January 11. The CEO of MetLife said they sold this segment so they could focus on insurance. The biggest weakness that MetLife currently faces is its large exposure to the weak European economy. Although many analysts are skeptical on the European market MetLife reported positively this past quarter and to offset some risk they are expanding into many different territories.

     By focusing on only insurance I believe there is a good opportunity for MetLife to focus on the segments it already owns and grow organically outward. MetLife is currently bidding on Citigroup’s United Kingdom Assurance division which would give them a dominate position in the United Kingdom insurance division. Although the results of the acquisition won’t come to light for a few more weeks, I believe this is a good indication that MetLife will be actively expanding. I believe because of this mix of expansion and organically growing its infrastructure we should expect a return on our investment in the near future.

-Logan Lyke

No comments: