MetLife Inc. (MET) reported third-quarter 2013 operating earnings per share (EPS) of $1.34, which missed the Zacks Consensus Estimate of $1.36. However, results were slightly ahead of the year-ago quarter’s EPS of $1.32. Operating earnings climbed 6% year over year to $1.5 billion.
However, including extraordinary items, GAAP net income soared to $942 million or 84 cents per share against net loss of $984 million or 92 cents per share in the prior-year quarter.
Results reflected growth across the Americas and EMEA along with expense control. These were partially offset by weakness in Asia and higher derivative losses driven by the unfavorable impact of foreign exchange rates and low interest rate. The downsides also weighed on the return on equity (ROE) and book value per share.
During the reported quarter, MetLife’s total operating expenses inched up 1.6% year over year to $14.82 billion, while total expenses decreased 12.3% year over year to $15.36 billion.
Total operating revenue for the reported quarter climbed 2% year over year to $16.9 billion, also breezing past the Zacks Consensus Estimate of $16.81 billion. However, total revenue dipped 1.0% year over year to $16.34 billion, primarily due to higher investment and derivative losses. MetLife’s premiums inched up 0.2% year over year to $9.09 billion and fee revenue improved 11.1% to $2.28 billion, while net investment income stood flat at $5.04 billion. Other revenues also grew 11.7% year over year to $486 million.
Segment Details
The Americas’ operating earnings rose 7.2% year over year to $1.32 billion. Premiums, fees and other revenues climbed 4% to $8.7 billion. Operating revenues grew 3.4% to $12.86 billion.
The segment witnessed core improvements in Latin America, Corporate Benefit Funding and Retail businesses, although variable annuity sales declined 41% over the prior-year quarter to $2.7 billion. Meanwhile, operating earnings in Group, Voluntary & Worksite Benefits fell 20% year over year due to lower underwriting results.
Operating earnings from Asia inched down 0.7% year over year to $257 billion, while premiums, fees and other revenues grew 12% on a constant currency basis to $2.4 billion, although it dipped 5% on reported basis. Operating revenues dipped 4.2% to $3.08 billion.
Operating earnings from EMEA jumped 37.1% year over year to $85 million. Premiums, fees and other revenues in this segment increased 8% to $707 million. Operating revenues climbed 7.2% to $831 million. Moreover, total sales improved 10%, reflecting augmented growth.
Separately, Corporate & Other operating loss was recorded at $160 million, wider than the loss of $134 million in the prior-year quarter. Total revenue stood at $127 million, down 28.7% from prior-year quarter due to low investment income.
Investment & Financial Update
At the end of the reported quarter, MetLife’s net investment income remained flat year over year at $5.0 billion, while net investment portfolio loss was $10 million, against gain of $41 million in the year-ago quarter. In addition, pre-tax derivative losses inflated to $546 million against $718 million in the year-ago quarter. Volatility in interest rate and foreign exchange led to the losses.
Meanwhile, under the company’s variable annuity hedging program, pre-tax variable investment income was $236 million in the reported quarter against $260 million in the year-ago period.
As of Sep 30, 2013, MetLife’s book value per share, excluding AOCI, inched up 0.6% year over year at $47.99. However, reported book value (including AOCI) per share decreased 10% to $52.54. Operating ROE stood at 10.3%, down from 11.3% at 2012-end.
At the end of Sep 2013, MetLife had total investments of $494.9 billion, down from $517.1 billion at 2012-end. Total assets decreased to $822.64 billion and long-term debt decreased to $18.25 billion, whereas cash and cash equivalents decreased to $11.38 billion and total equity decreased to $61.27 billion, from 2012-end.
Dividend Update
On Oct 22, 2013, the board announced a quarterly dividend of 27.5 cents per share, payable on Dec 13, 2013, to the shareholders of record as on Nov 8, 2013.
On Sep 13, 2013, MetLife paid a quarterly dividend of 27.5 cents per share to the shareholders of record as on Aug 9, 2013.
Others
While MetLife carries a Zacks Rank #3 (Hold), its peers Assurant Inc. (AIZ), Cigna Corp. (CI) and FBL Financial Group Inc. (FFG) each carry a Zacks Rank #2 (Buy).
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