MetLife’s (MET: 29.50, +0.98 (+3.44%)) share price rose slightly as they released their 4th quarter earnings after the market closed on February 3rd. For the quarter, MetLife reported net income available to common stockholders at $954 million, or $1.20 a share. It also posted gains in operating income of $148 million, or $0.19 a share. While low, this beat conservative analysts’ opinions by about 5 cents a share. However, these earnings are bleak compared to last years’ 4th quarter earnings of $1.54 a share. The fourth quarter results brought the year’s net income totals to $3.1 billion or $4.14 a share, which is a 25% decrease from 2007’s net income of $5.48 a share. Despite the relatively weak numbers, the release of the earnings gave MetLife stock a jump of around 3%.
Inside the Earnings
The weak quarter earnings have partially been attributed to the international presence of MetLife and the negative impact of the currency exchange rates during the 4th quarter. Earnings were reduced from $166 million to $115 million in the Latin America region. In addition to the exchange rate impact, MetLife reported individual business losses of $106 million, after posting $380 million in the prior period. These losses can be attributed to increased amortization costs on acquisitions and capitalization investments, while their revenues declined due to the lowering of fees in response to poor market conditions.
Competition & Financial Standings
MetLife has not been the only insurance giant to struggle, as its largest competitors American International Group (AIG: 1.05, -0.03 (-2.78%)) as well as Prudential (PRU: 26.59, -0.02 (-0.08%)), are down drastically in the last 12 months. While MetLife has fallen nearly 55% percent from its 52 week high, both AIG and PRU are down 98% and 70% respectively. MetLife boasts one of the best financial balance sheets in its industry. It also had the best revenue growth in its S&P 500 Insurance sub sector, with a growth of 14.6% this past quarter.
MetLife possess an incredibly strong and diverse portfolio of investments, which contributed a net income of $1.3 billion. The entire portfolio is worth $322.5 billion, and is extremely well managed.
