Life insurer MetLife Inc. (MET) on Monday forecast net income for the fourth quarter to decline from the prior-year period, which benefited from investment gains. However, the company projects operating earnings for the quarter to increase more than five-fold from last year, aided by a 7% increase in premiums, fees and other revenue.
For fiscal year 2009, the company projects a net loss, citing derivative losses, and also forecast operating earnings to decline from last year. Further ahead, for fiscal year 2010, Metlife projects operating earnings to grow about 50% over the previous year, buoyed by higher premium revenue and improving investment margins.
Ahead of the company's annual investor conference on Monday, New York-based Metlife forecast net income for the fourth quarter of fiscal year 2009 to decline to a range of $340 million-$485 million or $0.41-$0.59 per share from $954 million or $1.20 per share in the year-ago quarter. The company noted that net income for the year-ago quarter benefited from net realized investment gains, after income tax, of $1.4 billion, of which about $1.7 billion, after income tax, were due to derivative gains.
Metlife forecasts operating earnings for the fourth quarter in a range of $740 million-$785 million or $0.90-$0.95 per share, up significantly from $132 million or $0.17 per share in the prior-year quarter. On average, eighteen analysts polled by Thomson Reuters expect the company to report earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.
Premiums, fees and other revenues for the fourth quarter are projected by the company to be between $8.5 billion-$9.1 billion, up about 7% from $8.2 billion in the same period of the prior year. Analysts have a consensus revenue estimate for the fourth quarter of $12.47 billion.
Metlife uses derivatives to hedge a number of risks, including changes in interest rates and fluctuations in foreign currencies. The company noted that the derivative losses related to its own credit spread do not have an economic impact on the company, but are reflected in its net income. Metlife said that during the first nine months of 2009, an average 350 basis point improvement in the company's own credit spread contributed about $1 billion, after income tax, to derivative losses of $2.6 billion, after income tax.
For fiscal year 2009, Metlife forecasts net loss in a range of $2.2 billion-$2.3 billion or $2.64-$2.82 per share.
Operating earnings for the year are projected in a range of $2.3 billion-$2.4 billion or $2.81-$2.86 per share. This compares to operating earnings of $2.7 billion or $3.62 per share in the previous year. Analysts expect the company to report earnings of $2.85 per share for the year.
Full-year premiums, fees and other revenues are forecast by the company to be between $33.2 billion-$33.8 billion, up about 2% from $32.9 billion in the prior year.
Analysts expect the company to report revenues of $48.29 billion for the year.
Robert Henrikson, chairman, president & chief executive officer of MetLife said, "Over the course of 2009, net realized after-tax investment losses have continued to decline in line with our expectations and, excluding derivatives, are expected to represent less than 1% of our roughly $340 billion general account portfolio for 2009. We also expect our book value to increase to approximately $41 per share at the end of the year - a 49% increase over 2008. Furthermore, with our strong liquidity, we are well positioned to capitalize on future investment opportunities."
MetLife said that its operating earnings outlook for the fourth quarter and full year do not reflect the annual review of assumptions related to deferred acquisition costs and other adjustments. The review will be finalized later in the fourth quarter and is expected to have a positive impact on both fourth quarter and full year 2009 results, the company noted. Further ahead, for fiscal year 2010, Metlife forecasts operating earnings to grow about 50% over 2009 to a range of $3.3 billion-$3.6 billion or $4.00-$4.40 per share. Analysts expect the company to report earnings of $4.11 per share for the year.
However, the operating earnings forecast for the year does not include an anticipated charge of $30 million or $0.04 per share after tax, related to Metlife's Operational Excellence initiative that is focused on reducing complexity, increasing productivity, accelerating growth and improving the effectiveness of the company's operations.
According to Metlife, a 6%-8% increase in premiums, fees and other revenues as well as disciplined pricing and underwriting, improving investment margins, higher variable investment income and lower expenses will enable it to deliver significant earnings growth. The company said these factors will also increase its operating return on equity, or ROE to about 10% for 2010 and generate further ROE improvements beyond next year.
Henrikson said, "In addition to growing premiums, fees & other revenues over 2008, we also made significant progress on our Operational Excellence initiative in 2009, having achieved our goal of at least $400 million in pre-tax annualized savings one year ahead of our target. As a result, we are increasing our pre-tax annualized savings goal by $200 million to reach $600 million by year-end 2010."
In late October, Metlife reported a net loss for the third quarter, hurt mainly by derivative losses, and wider investment losses.
The company's net loss available to common shareholders for the third quarter was $650 million or $0.79 per share, compared to net income of $600 million or $0.83 per share in the prior-year quarter. Excluding items, operating earnings for the quarter grew to $718 million or $0.87 per share from $608 million or $0.84 per share in the year-ago quarter. Total revenues for the quarter declined 1% to $12.41 billion from $12.57 billion in the same quarter last year.
In early November, Metlife's peer Prudential Financial Inc. (PRU) reported a huge profit for the third quarter compared to a loss in the prior-year period, reflecting higher premiums, investment gains and narrower losses. The New Jersey-based company reported net income attributable to the company of $1.09 billion or $2.35 per share for the third quarter, compared to net loss of $118 million or $0.25 per share in the year-ago quarter.
For fiscal year 2009, Prudential raised its earnings outlook to a range of $5.40-$5.60 per share from the prior range of $5.00-$5.20 per share.
MET closed Friday's regular trading session at $35.33, up $1.22 on a volume of 8.56 million shares. In Monday's pre-market trading, the stock is trading at $35.58, up $0.25 or 0.71%. In the past 52 weeks, the stock has been trading in a range of $11.37-$41.45.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.