By John Kell
MetLife Inc. said fourth-quarter net income soared as the life
insurer reported a large net derivative loss a year earlier.
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 john.kell@wsj.com
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