U.S. life insurer MetLife Inc. (MET), Wednesday reported a 90 percent plunge in fourth-quarter profit, hurt mainly by huge derivative losses. However, excluding items, MetLife's operating earnings for the quarter topped Street estimates on growth in the Americas and EMEA region. Revenues too came in ahead of expectations.
MetLife's results come amid its strategy of shifting its business mix towards less capital-intensive products. The company has also been expanding its presence in emerging economies including Chile, Turkey, and India.
The company incurred hefty derivative losses of $1.3 billion during the quarter. The insurer in December said it would record charges as it cut return projections for its bond investments and fewer customers than expected surrendered variable annuities. At that time, the company also warned of weak operating earnings in 2013 due to the extended low-rate interest environment.
The New York-based company reported fourth-quarter net income to common shares of $96 million or $0.09 per share, compared with $959 million or $0.90 per share last year.
Excluding one-time gains and losses, operating earnings for the quarter totaled $1.4 billion or $1.25 per share, compared with $1.24 million or $1.17 per share in the prior year.
On average, 21 analysts polled by Thomson Reuters expected earnings of $1.18 per share for the quarter. Analysts' estimates typically exclude special items.
Operating earnings at Americas grew 21 percent, led by Retail, Corporate Benefit Funding and Latin America. Results in this region were impacted by $70 million after-tax catastrophe losses driven by Superstorm Sandy.
Operating earnings in the EMEA region jumped 26 percent, while Asia slid 24 percent due mainly to the annual review of actuarial assumptions.
MetLife reported quarterly revenues of $18.4 billion, up 12 from $16.3 billion last year. Ten analysts on consensus estimated revenues of $17.25 billion for the quarter.
Premiums, fees & other revenues rose 15 percent to $13.2 billion from last year. Americas grew 18 percent, and Asia 11 percent. Europe slid 3 percent due to MetLife's exit from fixed annuities in the U.K.
Net investment income for the quarter grew 6 percent to $5.2 billion.
At the end of the quarter, the company had a book value of $57.17 per share, up 9 percent from a year ago.
MetLife's plan to expand in emerging markets led to the company recently agreeing to buy Chilean private pension fund AFP Provida S.A. for about $2 billion from Spain's Banco Bilbao Vizcaya Argentaria, S.A. (BBVA). In 2010, MetLife acquired American Life Insurance Co. from American International Group Inc. (AIG) in 2010 for about $16 billion.
The company has also been exiting its banking business, and in January, completed the sale of MetLife Bank, N.A.'s deposit business to GE Capital. As a result, about $6.4 billion in bank deposits have been transferred to GE Capital Retail Bank.
MetLife stock closed Wednesday at $37.50, up 1.00%, on a volume of 9.1 million shares on the NYSE. In after hours, the stock dropped 1.07%. In the past year, the stock trended in a range of $27.60 - $39.55.
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