MetLife Inc. (MET) reported fourth-quarter 2013 operating earnings per share (EPS) of $1.37, which comfortably outpaced the Zacks Consensus Estimate of $1.30 and the year-ago quarter EPS of $1.25. Operating earnings jumped 14% year over year to $1.56 billion.
However, including extraordinary items, GAAP net income soared to $877 million or 77 cents per share against mere $96 million or 9 cents per share in the prior-year quarter.
Results reflected growth across the Americas, Asia and EMEA along with strong expense control and lower derivative losses, leading to improved return on equity (ROE). These were partially offset by consistent weakness in variable annuity products, declining leverage and low interest rates.
During the reported quarter, MetLife’s total operating expenses slipped 0.8% year over year to $16.25 billion, whereas total expenses decreased 3.5% to $17.19 billion.
Total operating revenue stood at $18.38 billion, compared with $18.36 billion in the year-ago quarter, but modestly exceeded the Zacks Consensus Estimate of $17.05 billion. However, total revenue climbed 6.5% year over year to $18.46 billion, primarily due to significantly lower investment and derivative losses.
MetLife’s premiums dipped 2.9% year over year to $10.27 billion, while fee revenue improved 7.5% to $2.32 billion and net investment income edged up 2.5% to $5.31 billion. Other revenues also grew 9.9% year over year to $487 million.
Segment Details
The Americas’ operating earnings rose 13.3% year over year to $1.42 billion. Premiums, fees and other revenues inched up 1% to $10 billion. Operating revenues grew 1.6% to $14.29 billion.
The segment witnessed core improvements in Latin America, Corporate Benefit Funding and Retail businesses, although variable annuity sales declined 49% over the prior-year quarter to $1.7 billion. The Provida acquisition improved underwriting results in Mexico. Meanwhile, operating earnings in Group, Voluntary & Worksite Benefits soared 38% year over year due to lower catastrophe losses.
Operating earnings from Asia surged 63.6% year over year to $324 billion, while premiums, fees and other revenues grew 9% on a constant currency basis to $2.3 billion, although it dipped 8% on reported basis. Operating revenues dipped 5.5% to $3.09 billion.
Operating earnings from EMEA escalated 50.8% year over year to $89 million. Premiums, fees and other revenues in this segment increased 3% (2% on constant currency basis) to $700 million. Operating revenues climbed 2.4% to $826 million. Moreover, total sales dipped 1%, reflecting 21% growth from emerging markets that was shadowed by challenges in the UK.
Separately, Corporate & Other operating loss was recorded at $274 million, wider than the loss of $137 million incurred in the prior-year quarter due to higher asbestos claim reserves. Total revenue stood at $171 million, down 19.7% from the prior-year quarter due to lower investment income.
Full-Year 2013 Highlights
For full-year 2013, MetLife reported operating EPS of $5.63, exceeding both the Zacks Consensus Estimate of $5.56 and the 2012 equivalent of $5.28. Operating net income escalated 11% year over year to $6.29 billion. On a GAAP basis, net income rose to $3.25 billion or $2.91 per share in 2013 from $1.20 billion or $1.12 per share in 2012.
Operating revenues of $69.3 billion inched up 1% over 2012, topping the Zacks Consensus Estimate of $67.88 billion. However, total revenue stood flat at $68.20 billion. Total operating expenses inched down 0.5% year over year to $60.53 billion, while total expenses declined 3.8% to $64.15 billion.
Investment & Financial Update
At the end of the reported quarter, MetLife’s net investment income rose 3% year over year to $5.3 billion, while net investment portfolio loss was $17 million compared with $2 million in the year-ago quarter. In addition, post-tax derivative losses contracted to $373 million from $1.32 billion 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 $460 million in the reported quarter against $376 million in the year-ago period.
As of Dec 31, 2013, MetLife’s book value per share, excluding AOCI, climbed 4% year over year at $48.49. However, reported book value (including AOCI) per share decreased 7% to $53.04. Operating ROE stood at 12.0% at 2013-end, up from 11.3% at 2012-end.
At the end of Dec 2013, MetLife had total investments of $488.8 billion, down from $517.1 billion at 2012-end. Total assets increased to $885.3 billion and long-term debt decreased to $18.65 billion, whereas cash and cash equivalents decreased to $7.59 billion and total equity decreased to $62.1 billion, from 2012-end.
Dividend Update
On Jan 6, 2014, the board announced a quarterly dividend of 27.5 cents per share, payable on Mar 13, 2014, to the shareholders of record as on Feb 6.
On Dec 13, 2013, MetLife paid a quarterly dividend of 27.5 cents per share to the shareholders of record as on Nov 8, 2013.
Others
While MetLife carries a Zacks Rank #3 (Hold), its peers Loews Corp. (L), CNO Financial Group Inc. (CNO) and American International Group Inc. (AIG) carry a Zacks Rank #1 (Strong Buy).
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