MetLife Posts $2.13 Billion Loss, Misses Estimates
February 01 2017 - 04:55PM
Dow Jones News
By Leslie Scism
MetLife Inc. posted a $2.13 billion fourth-quarter net loss, hit
by mark-to-market losses primarily tied to its hedging program to
protect against low interest rates.
Although the results took a hit under accounting rules as rates
edged up at year end, the rise in interest rates is a development
that bodes well in the long term for MetLife and peers. Few
American industries are as hurt by low rates as life insurers,
which invest the premium that steadily flows in until the money is
needed to pay claims. The money is typically invested in higher
quality bonds, so insurers' profits have been pressured as they put
new money to work at the ultralow levels in place since 2008.
At MetLife, operating income rose to $1.42 billion, or $1.28 a
share, compared with $1.38 billion, or $1.23 a share, in the
year-earlier quarter. The results missed analysts' consensus
expectation of $1.34 a share.
Operating income excludes the effect of the hedging program as
well as realized capital gains and losses in the investment
portfolio and some other items. The metric is closely watched by
Wall Street as a measure of an insurer's ability to earn profit on
a recurring basis.
MetLife said its operating earnings in its big U.S. segment
increased 19% year over year, 22% in Asia and 33% in the smaller
Europe, Middle East and Africa business. It cited volume growth,
cost improvement, a tax-related item in Japan and a claims-reserve
release in one location.
But operating profit fell in Latin American by 22%, where
MetLife said it enjoyed a one-time tax benefit in the year-earlier
period.
MetLife has one of the biggest international networks of any
U.S. life insurer, which it acquired from American International
Group Inc. in 2010 when AIG was slimming down to repay its
government bailout.
The net loss in the period compared with a profit of $785
million a year earlier and included $3.2 billion in derivative
losses tied to changes in interest rates, currencies and other
things.
Under generally accepted accounting principles, life insurers
must mark their derivatives to market, and when rates rise, the
value of the protection they buy to protect results from low rates
falls.
The New York company's most recent results reflect one of its
last quarters as the nation's biggest life insurer by assets. In
the next few months, it aims to complete a spinoff of most of its
U.S. retail life-insurance operations. Long the core of the nearly
150-year-old company, the assets are being divested because MetLife
believes they will be slower growing and more capital intensive
than parts it is retaining.
The divestiture will leave MetLife focused on insurance sold to
employers for their group-benefits programs, pension and retirement
products and the large overseas unit.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
February 01, 2017 16:40 ET (21:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
MetLife (NYSE:MET)
Historical Stock Chart
From Feb 2024 to Mar 2024
MetLife (NYSE:MET)
Historical Stock Chart
From Mar 2023 to Mar 2024