MetLife Inc. (MET), the largest U.S. life insurer, said operating earnings climbed 11 percent in the first quarter as revenue rose in Asia and the Americas.
Operating profit, which excludes some investment results, increased to $1.46 billion, or $1.37 per share, from $1.32 billion, or $1.23, a year earlier, the New York-based company said today in a statement, matching preliminary results it reported last week.
Chief Executive Officer Steven Kandarian reorganized leadership by giving top managers responsibility for geographic regions as the company pursues expansion outside the U.S. following its 2010 purchase of American Life Insurance Co. Kandarian is selling banking and mortgage-related operations to focus on insurance and retirement products.
“MetLife is our top pick in the life insurance sector based on its diversified, international platform that was enhanced by the Alico acquisition,” analysts led by Jay Gelb at Barclays Plc wrote in an April 20 research note. “Operating results exceeded expectations.”
The insurer released preliminary results on April 20 after inadvertently disclosing some 2012 figures on its website. The company made the data available last week as it posted information to help investors understand changes in how it presents results, it said in a statement.
‘Fix or Exit’
MetLife has gained 3.1 percent to $36.47 since the close April 19, and is up 17 percent this year. The KBW Insurance Index has gained 11 percent since Dec. 31.
Operating earnings grew 13 percent to $1.2 billion in the Americas and 33 percent to $297 million in Asia.
The insurer is working to exit banking to reduce oversight from U.S. regulators who have prevented it from buying back stock or raising its dividend. MetLife agreed today to sell its reverse-mortgage portfolio to Nationstar Mortgage LLC for an undisclosed amount, after announcing in January it would stop originating home loans.
MetLife has also retreated from businesses in Taiwan and the U.K that weren’t meeting the company’s return thresholds, Kandarian has said.
“We are committed to achieving returns in excess of our long-term cost of capital,” Kandarian wrote in a March 16 letter to shareholders. “We will not achieve this goal overnight. But over time, we will fix or exit businesses that cannot consistently clear their hurdle rates.”
Loss on Derivatives
MetLife reported a first-quarter net loss of $144 million, compared with net income of $877 million a year earlier, after recording a derivative loss of almost $2 billion. The company said last week the preliminary net loss was $64 million, with $30 million of investment loses. That investment loss widened to $110 million in today’s statement.
MetLife uses derivatives to guard against market risks, such as interest-rate declines and currency fluctuations. The derivative loss also reflects the insurer’s lower credit spreads during the quarter. Book value rose 1.8 percent to $53.37 per share from $52.43 at Dec. 31.
The insurer took a $52 million charge in the quarter as part of a multistate settlement that came after regulators reviewed whether companies were holding funds that should go to beneficiaries. MetLife will pay out $188 million in 2012, the firm said on April 23. The rest of an approximately $500 million deal will be paid over the next 17 years.
MetLife board member Eduardo Castro-Wright resigned on April 24 after the New York Times reported that the Wal-Mart Stores inc. (WMT) unit he ran in Mexico paid bribes to government officials. Castro-Wright was a member of MetLife’s Governance and Corporate Responsibility Committee, which “oversees the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards,” the insurer said last month.’’
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