On Jan 7, shares of MetLife, Inc. MET touched a 52-week low of $42.31. The beginning of the year has been an uneventful one for the company, which has lost its share value by 10% in just 4 trading days of 2016. The stock continues its 2015 tale, which saw a value decline of 12% compared to a 0.7% decline in the S&P.
The stock must have received a beating after its CEO commented in Dec 2015 that the company’s returns on private-equity portfolio in 2016 will be in the low-to-mid double-digit range. Also variable investment income for 2015 is expected to be below MetLife's previous full-year projections of $1.3 billion to $1.7 billion.
The company is awaiting the final capital rules that are yet to be drafted for federally regulated life insurers. The insurer is contesting its designation as a systemically important financial institution (SIFI), on grounds that its restructured operations pose less systematic risk than other banking institutions. The SIFI tag warrants stressful capital compliance scenarios, whereby MetLife will have to increase its capital-adequacy levels to guard against potential losses and contingencies.
There are also a host of other factors that seems to have dragged down the stock of MetLife, which is one of the largest players in the industry.
In Latin America, it is faced by challenges such as weak regional economic growth, currency weakness and regulatory uncertainty across the region.
Though the Asian market continues to offer attractive opportunities, the company faces challenges such as strong U.S. dollar and regulatory changes. Currency exchange rates are expected to have a negative impact to the tune of $45 million on 2016 operating earnings.
In its Group, Voluntary & Worksite Benefits segment, the company expects operating earnings to decline approximately $50 million, due to changes to expense allocation and interest on capital.
In its Retail Annuities segment, the company faces challenges related to fiduciary proposal from the Department of Labor regarding the sale of variable annuities, investment spread compression and continued negative variable annuity fund flows.
In its Retail Life and Other segment the company expects closed block operating earnings to decline approximately $30 million by 2016 due to changes to expense allocation and interest on capital.
Also in the last quarter, the company performed miserably by missing estimates by 57.8%, due to foreign exchange, equity market and interest rate related headwinds.
MetLife carries a Zacks Rank #4 (Sell). Some-better ranked players in the space are Allianz SE AZSEY, James River Group Holdings, Ltd. JRVR and Loews Corp. L. While Allianz sports a Zacks Rank #1 (Strong Buy), James River Group and Loews carry a Zacks Rank #2 (Buy).
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