Yesterday, BusinessWire reported that MetLife Inc. (MET) has approved the vending of its Caribbean operations to Pan-American Life Insurance Group. However, the terms and financials of the deal remain undisclosed.
Accordingly, MetLife has decided to sell its insurance operations in Panama, Costa Rica and Trinidad & Tobago. Furthermore, in an attempt to optimize its portfolio through size and operation, the company also sold half of its stake in the Wells Fargo Plaza in Houston. However, MetLife has held on to the asset management and ownership of the other half of the building.
Earlier, in July 2011, MetLife had also intimated about vending its redundant operations in Taiwan and Venezuela and parts of Japan and the UK. All of these divestments helped the company generate over $1.0 billion of capital.
The efforts to organize its operations globally primarily comes post the acquisition of American Life Insurance Company (ALICO) from American International Group Inc. (AIG) in November last year. This asset adoption has further diversified revenue by product, distribution and geography as ALICO has extended MetLife’s presence in 64 countries, up from 17 previously, thereby kicking its non-U.S. revenue share up from 15% of the total to 40%.
However, the ongoing low interest rate environment has been adversely affecting MetLife’s exposure in the equity market, which again faces intense volatility. Hence, the company is strategically re-aligning its business operations to optimally utilize its existing resources gained from ALICO.
Earnings Review
MetLife reported third quarter operating earnings per share of $1.11, three pennies ahead of both the Zacks Consensus Estimate and the year-ago quarter. Operating earnings jumped 23% year over year to $1.18 billion from $958 million in the year-ago period. The upside was primarily due to robust growth in the international business segment, driven by ALICO.
As a result, the Zacks Consensus Estimate for the fourth quarter of 2011 is currently pegged at $1.24 per share, up about 11% from the year-ago quarter. However, in the last 30 days, 10 of the 14 analyst firms have reduced their estimates, while a couple of upward revisions have been witnessed. This reflects the ongoing market volatility and weak global cues. For 2011, earnings are expected to escalate about 13% to $4.95 per share over 2010.
Additionally, the Zacks Rank for MetLife currently stands at #3, translating into a short-term Hold and long-term Neutral recommendation.
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