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MetLife Says Insurer’s 2012 Earnings Will Climb, May Reach $5.20 a Share

Next year’s operating profit, which excludes some investment results, will be $4.80 to $5.20 a share, the New York-based company said today in a statement. That compares with the average $5.08 estimate of 20 analysts surveyed by Bloomberg.

Kandarian, 59, is making management changes after taking over in May for Robert Henrikson, who acquired American Life Insurance Co. last year for about $16 billion. Kandarian named former Chief Financial Officer William Wheeler last month as head of a new Americas division and announced the departure of William Mullaney, previously the president of U.S. operations. The new CEO said he was seeking a leader for the Asia division.

“The structure makes sense, and I think that clearly this was the ultimate decision between Bill Mullaney and Bill Wheeler,” said Steven Schwartz, an analyst at Raymond James & Associates Inc. who rates the insurer “strong buy.” Mullaney was “the odd man out.”

Premiums, fees and other revenue will increase by about 5 percent next year to a range of $47.3 billion to $48.6 billion on growth outside the U.S., the insurer said today. Operating earnings will be $5.1 billion to $5.6 billion in 2012, compared with $5.2 billion to $5.3 billion this year, the company said.

‘Several Challenges’

Fourth-quarter 2011 profit will probably be $1.16 to $1.26 a share, MetLife said, missing the average $1.28 estimate in a Bloomberg survey.

“Our industry faced several challenges during 2011 – a volatile macro-economic environment, several natural disasters and an uncertain regulatory environment,” Kandarian said in the statement today.

MetLife fell 29 percent this year through Dec. 2, compared with the 16 percent slump in the 24-company KBW Insurance Index. (KIX)

Kandarian may speed plans to sell a bank unit after the Federal Reserve rejected the insurer’s request to raise its dividend and resume share buybacks this year. MetLife was told to wait until its portfolio was tested against a “revised adverse macroeconomic scenario,” the company said in an Oct. 25 statement. The lending operation subjects the company to Fed oversight. The 2012 forecast assumes no share buybacks, MetLife said in a presentation on its website today.

Investment Income

The insurer, which had investments of about $500 billion at the end of September, is making more from bond coupons and dividends this year after the portfolio grew with the Alico purchase. Net investment income rose 15 percent to $14.7 billion in the first nine months of the year.

MetLife is seeking to reduce risk on the retirement products it sells as lower interest rates pressure the insurer’s investment yields, Kandarian said on Oct. 28. The company will lower the returns it promises customers who buy variable annuities, Kandarian said.

The insurer’s sales of variable annuities in the third quarter surged 84 percent to about $8.6 billion. When stock markets fall, variable-annuity sellers often are required to shoulder a portion of the losses for their customers. MetLife led sales of the equity-based retirement products in the U.S. in the nine months ended Sept. 30, according to data from trade group Limra.


 

(Bloombergnews)

 

 


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