MetLife Reinstated at Neutral - Analyst Blog
We have reiterated our Neutral recommendation on MetLife Inc. ( MET ) based on its consistent progress from the ALICO acquisition, partially offset by higher expenses, consistent low rate environment and restricted growth vision on MetLife Bank.
MetLife reported third quarter operating earnings per share of $1.11, triple pennies ahead of both the Zacks Consensus Estimate and the year-ago quarter. Operating earnings also accelerated 23% year over year to $1.18 billion from $958 million in the year-ago period.
The upside was primarily due to a robust growth in the International business segment, improved underwriting results as well as higher demand for variable annuities, net investment income and higher-than-expected derivative gains. This was partially offset by underperformance at its Banking and the U.S. business segments along with higher expenses. During the reported quarter, MetLife’s total expenses shot up 26.8% year over year to $15.15 billion.
The declining trend is also reflected from the continued weakness in the company’s auto and home segment and MetLife Bank. Underperformance in operations and stringent regulations bank holding companies attached to MetLife Bank are further weakening the competitive strength of MetLife.
Previously, the company had also faced a rejection on its capital plan from the Fed based on the size and scale of its bank operations. These factors have finally impelled management to explore its divestment in the near future.
Current interest rate environment will continue to put pressure on the spreads and MetLife’s risk-adjusted capitalization, which stands lower for its current rating level. Although losses in net investment portfolio have moderated from the peak levels during 2008 and the early part of 2009, these are expected to persistently trim profits over the near term until the markets gain buoyancy.
Going ahead, earnings will also likely be under pressure as the low interest rate environment continues to weigh on the company’s interest sensitive product margins, leading to contraction in spreads.Moreover, we believe that the radical and extraordinary upside in 2011, primarily from ALICO, will likely create difficult comps in 2012.
Metlife Auto Insurance Group Discount - News
The Company provides a variety of insurance and financial services products, including life, dental, disability and long-term care insurance, various annuity products, and auto and home insurance. Within the United States, it also provides a range of
During the reported quarter, MetLife's total expenses shot up 26.8% year over year to $15.15 billion. The declining trend is also reflected from the continued weakness in the company's auto and home segment and MetLife Bank.
It operates in Banking, Corporate & Other, which includes MetLife Bank, National Association (MetLife Bank) and other business activities. US Business pr ovides insurance and financial services products, including life, dental, disability, auto and
Current PIA Partnership companies include: Encompass; Erie Insurance; Harleysville Insurance; Liberty Mutual Agency Corporation; MetLife Auto & Home; Motorists Insurance Group; Progressive Casualty Insurance Company; Selective Insurance Group;
Management is also undertaking this step to re-focus on its core insurance operations. Overall, we believe MetLife should continue to benefit from its diversified business mix as well as its leading brand. The company's capital position remains one of
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