MetLife Inc. (MET) posted fourth-quarter 2014 operating earnings per share (EPS) of $1.38, which exceeded the Zacks Consensus Estimate by a penny. Earnings improved 1% year over year. Operating earnings of $1.6 billion increased 2% year over year.
Additionally, including extraordinary items, GAAP net income increased to $1.49 billion or $1.30 per share from $0.88 billion or 77 cents per share in the prior-year quarter.
Results reflected improved sales and earnings across the Americas and Asia along with higher derivative gains, leading to improved book value per share. These were partially offset by higher expenses and a lower return on equity (ROE).
Total operating revenue slipped 0.5% year over year to $18.2 billion and was almost in line with the Zacks Consensus Estimate. Total revenue jumped 3.6% year over year to $19.1 billion, primarily due to higher investment and derivative gains.
While MetLife’s premiums remained flat year over year at $10.3 billion, fee revenue improved 0.8% to $2.3 billion. Net investment income declined 2.7% to $5.1 billion. However, other revenues increased 9% year over year to $531 million.
During the reported quarter, MetLife’s total operating expenses decreased 0.5% year over year to $16.1 billion, while total expenses declined 0.9% to $17 billion.
Full-Year Highlights
Operating net earnings of $5.74 per share were a couple of cents ahead of the Zacks Consensus Estimate. Earnings also improved 2% over 2013.
Including one-time items, net income jumped 86% year over year to $5.42 per share.
Operating revenue improved 3% over 2013 to $71 billion.
Segment Details
The Americas’ operating earnings climbed 4% (6% on constant currency basis) year over year to $1.5 billion. Premiums, fees and other revenues rose 1% (2% on constant currency basis) to $10 billion. Operating revenues grew 0.7% to $14.347 billion.
The segment witnessed core improvement in Corporate Benefit Funding, Retail and Latin America sub-segments.
Operating earnings from Asia grew 3% (9% on constant currency basis) year over year to $335 million driven by growth across Asia, primarily in Japan and Korea. Premiums, fees and other revenues increased 6% on a constant currency basis and down 3% on a reported basis to $2.3 billion. Operating revenues climbed 3.5% to $2.985 billion. Total sales decreased 30% due to a large Australian employee benefit sale and elevated Yen life sales in Japan in the prior-year quarter.
Operating earnings from EMEA declined 4% (up 9% on constant currency basis) year over year to $85 million. Premiums, fees and other revenues in this segment decreased 4% (up 3% on constant currency basis) to $671 million. Operating revenues were down 4.2% to $791 million. Moreover, total sales rose 22%, reflecting growth in emerging markets and strong employee benefit sales in the Middle East.
Separately, Corporate & Other operating loss was recorded at $316 million, wider than a loss of $278 million. Total revenue was $122 million, down from $166 million in the prior-year quarter.
Investment & Financial Update
In the reported quarter, MetLife’s net investment income decreased 7% year over year to $5.4 billion. In addition, derivative gains were $185 million ($120 million post tax) against a loss of $373 million in the year-ago quarter. Decline in interest rate and changes in foreign exchange led to the gains.
As of Dec 31, 2014, MetLife’s book value per share, excluding AOCI and FCTA, climbed 5% year over year to $49.53. Operating ROE was 11.3% at December end, down from 12.0% at 2013 end.
At the end of Dec 2014, MetLife had total investments of $506.0 billion, up from $488.8 billion at 2013 end. Total assets increased to $902.3 billion (from $885.3 billion at 2013 end) while long-term debt decreased to $16.3 billion (from $18.6 billion). Cash and cash equivalents rose to $10.8 billion (from $7.6 billion) and total equity increased to $72 billion (from $61.6 billion at 2013 end).
Dividend Update
On Jan 6, the board of directors declared the first-quarter 2015 dividend of 35 cents per share. The dividend is payable on Mar 13, 2015, to shareholders of record as of Feb 6.
Zacks Rank
Currently, MetLife carries a Zacks Rank #4 (Sell).
Performance of Other Multiline Insurers
Bottom lines at Cigna Corp. (CI), MGIC Investment Corp. (MTG) and Assured Guaranty Ltd. (AGO) have outperformed their respective Zacks Consensus Estimate in the fourth quarter.
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