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MetLife Inc. Reports Operating Results (10-Q)

November 04, 2009 | About:
Barel Karsan

10qk

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MetLife Inc. (MET) filed Quarterly Report for the period ended 2009-09-30.

Metlife Inc. is a leading provider of insurance and financial services to a broad spectrum of individual and institutional customers. The company currently provides individual insurance annuities and investment products. The company also provides group insurance and retirement and savings products and services to corporations and other institutions. The company believes that their unparalleled franchises and brand names uniquely position them to be the preeminent provider of insurance and financial services in the U.S. Metlife Inc. has a market cap of $27.39 billion; its shares were traded at around $33.46 with a P/E ratio of 15.6 and P/S ratio of 0.5. The dividend yield of Metlife Inc. stocks is 2.2%. Metlife Inc. had an annual average earning growth of 44.6% over the past 5 years.

Highlight of Business Operations:

During the three months ended September 30, 2009, MetLife, Inc.s net income (loss) available to common shareholders decreased $1.3 billion to a loss of $650 million from income of $600 million in the comparable 2008 period. The period over period change is predominantly due to an unfavorable change of $1.8 billion in net investment gains (losses), resulting from a $1.4 billion net investment loss, net of related adjustments, in the current period compared with a net investment gain of $422 million, net of related adjustments, in the comparable 2008 period. The change in net investment losses was partially offset by a reduction of $428 million in losses from discontinued operations and an increase in operating earnings of $110 million.

The trends noted above were also drivers of results for the nine months ended September 30, 2009, as net income (loss) available to common shareholders decreased $4.8 billion to a loss of $2.7 billion from income of $2.1 billion in the comparable 2008 period. The increase in net investment losses was $4.2 billion to a loss of $4.3 billion, net of related adjustments, in the current period compared with a loss of $83 million, net of related adjustments, in the comparable 2008 period. In addition, operating earnings declined $990 million and income from discontinued operations of $34 million increased from a loss of $349 million.

The $1.4 billion in net investment losses, net of related adjustments, in the three months ended September 30, 2009, includes an $857 million loss on derivatives. MetLife uses derivatives in connection with its broader investment portfolio management efforts to hedge a number of risks, including changes in interest rates and foreign currencies. During the current quarter, an improvement, or tightening, in MetLifes credit spread, which impacts the valuation of certain insurance liabilities, contributed $582 million to the $857 million in derivative losses. Changes in the value of foreign-currency related derivatives, driven by the weakening of the U.S. Dollar against other major currencies, also contributed to the loss and are, in general, offset on an economic basis by gains recognized on various assets and liabilities. The balance of the net investment losses was primarily due to credit-related losses and impairments across a broad range of invested asset classes and was consistent with the Companys expectations.

For the nine months ended September 30, 2009, the $4.3 billion of net investment losses, net of related adjustments, reflects a $2.6 billion loss on derivatives, including an $1.0 billion loss from improvement, or tightening, in MetLifes credit spread.

On March 2, 2009, the Company sold Cova Corporation (Cova), the parent company of Texas Life Insurance Company (Texas Life) to a third party for $134 million in cash consideration, excluding $1 million of transaction costs. The net assets sold were $101 million, resulting in a gain on disposal of $32 million, net of income tax. The Company also reclassified $4 million, net of income tax, of the 2009 operations of Texas Life into discontinued operations in the consolidated financial statements. As a result, the Company recognized income from discontinued operations of $36 million, net of income tax, during the first quarter of 2009.

During the three months ended September 30, 2009, MetLife, Inc.s net income (loss) available to common shareholders decreased $1.3 billion to a loss of $650 million from income of $600 million in the comparable 2008 period. The period over period change is predominantly due to an unfavorable change of $1.8 billion in net investment gains (losses), resulting from a $1.4 billion net investment loss, net of related adjustments, in the current period compared with a net investment gain of $422 million, net of related adjustments, in the comparable 2008 period. The change in net investment losses was partially offset by a reduction of $428 million in loss from discontinued operations and an increase in operating earnings of $110 million.

Read the The complete ReportMET is in the portfolios of Richard Snow of Snow Capital Management, L.P., NWQ Managers of NWQ Investment Management Co, David Williams of Columbia Value and Restructuring Fund, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Richard Pzena of Pzena Investment Management LLC, Sarah Ketterer of CAUSEWAY CAPITAL MANAGEMENT LLC, David Dreman of Dreman Value Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Keeley of Keeley Fund Management.

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