Monday, February 7, 2011

MetLife, Inc. (NYSE: MET): Q4 Earnings Preview 2010

MetLife Inc. (NYSE: MET) is scheduled to release its fourth-quarter earnings after the closing bell on Wednesday, February 9, 2011. Analysts, on average, expect the company to report earnings of $1.10 per share on revenue of $13.51 billion. In the year ago period, the company reported earnings of 96 cents per share on revenue of $13.32 billion.

MetLife, Inc., through its subsidiaries, provides insurance, employee benefits, and financial services in the United States, Latin America, the Asia Pacific, Europe, the Middle East, and India.

In the preceding third-quarter, the New York, NY United States-based company's net loss was $286 million or $0.32 per share, compared to a loss of $650 million or $0.79 per share in the same quarter a year ago. Operating earnings, which excludes investment gains and losses, were $878 million, or $0.99 per share for the quarter. Revenue rose 21.5% to $12.44 billion from $10.24 billion. Analysts, on average, expected the company to report earnings of $1.03 per share on revenue of $13.05 billion.

Last month, the company said that it expects strong double-digit growth in operating earnings for the fourth quarter and fiscal 2010, mainly on anticipated increase in premiums, fees & other revenues, as well as the recent purchase of American International Group, Inc.'s (AIG) Alico. The company also provided targets for fiscal 2011. For the fourth quarter, MetLife expects net income available to MetLife's shareholders between $170 million and $570 million, or $0.17 to $0.56 per share. This is in comparison to prior year's $289 million or $0.35 per share. Operating earnings for the quarter, which excludes investment gains and losses, is projected to be between $1.1 billion and $1.2 billion, or $1.04 to $1.14 per share, representing a growth of 39% from $793 million or $0.96 per share recorded in 2009. Quarterly premiums, fees and other revenues are expected to be between $9.5 billion and $9.9 billion, up 4% from $9.3 billion a year ago.

For full year 2010, net income is expected between $2.8 billion and $3.2 billion or $3.13 to $3.57 per share, reflecting net investment and net derivative gains and losses. MetLife's prior year's net loss of $2.4 billion or $2.89 per share included $3.3 billion in derivative losses. Meanwhile, operating earnings would be in the range of $3.8 billion and $3.9 billion or $4.26 to $4.36 per share. This represents an anticipated 62% increase from $2.4 billion or $2.87 per share recorded in 2009. Twenty analysts estimate earnings of $4.29 per share for full year 2010. Annual premiums, fees & other revenues are expected to be between $35.6 billion and $36 billion, up about 5% from last year's $34 billion. The company's 2010 year-end book value per share is anticipated between $44.50 and $45.85, representing a 19% growth from $37.96 at year-end 2009.

MetLife also issued its fiscal 2011 forecast, expecting 38% rise in operating earnings over 2010 at between $5.1 billion and $5.5 billion or $4.75 to $5.15 per share. Wall Street analysts anticipate 2011 earni The company also anticipates an improved operating return on equity, or ROE, of approximately 11% for 2011. 

Early in November, MetLife completed the acquisition of American Life Insurance Co. or Alico from American International Group, Inc. or AIG for $16.2 billion. MetLife paid $7.2 billion in cash consideration after adjustments and $9.0 billion in MetLife equity and other securities to AIG for the acquisition of Alico. The addition of the global life insurer, ALICO, is expected to diversify the company’s income sources while also mitigating the risks arising from other core operations of MetLife in the US, primarily the auto and home segment.

Late in October, US life insurer MetLife, Inc. (MET: News ) said its subsidiary MetLife Worldwide Holdings, Inc. would sell its stake in its Japanese joint venture, Mitsui Sumitomo MetLife Insurance Co., Ltd., or MSI MetLife, to its joint venture partner, MS&AD Insurance Group Holdings, Inc. for around US$275 million. Further, the company said that the deal would help it to focus on American Life Insurance Co., or Alico integration.

MetLife should continue to benefit from its diversified business mix as well as its leading brand. The company recently said that that it originated, through its Real Estate Investments department, over $8 billion in commercial mortgage loans in 2010. The company's $38 billion commercial mortgage portfolio continued to perform well last year even as the industry experienced tight credit markets, lower property values and rising defaults.

Full Disclosure: None.
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