MetLife Inc. (MET), the largest U.S. life insurer, reported a first-quarter profit as Chief Executive Officer Steven Kandarian expands outside the U.S.
Net income was $986 million compared with a loss of $144 million a year earlier that was tied to MetLife’s narrowing credit spreads, the New York-based insurer said today in a statement. Operating profit was $1.48 a share, beating the $1.30 average estimate of 20 analysts surveyed by Bloomberg.
Kandarian, 61, is searching for customers in faster-growing economies and reducing expenses as slow expansion in the company’s main markets weighs on results. The Standard & Poor’s 500 Index rose 10 percent in the quarter, helping units that sell retirement products and cushioning the damage from low interest rates on investment income.
“When equity markets are strong, they get a boost,” Sean Dargan, an analyst at Macquarie Group Ltd., said in an interview before results were announced. “On the interest-rate front, they haven’t gotten any real help.”
MetLife has advanced 17 percent this year on the New York Stock Exchange. The shares added 60 cents to $39 in late trading at 4:16 p.m., after results were announced. The firm lifted its dividend for the first time since 2007 last week after selling operations including residential mortgage origination to end its status as a bank overseen by the Federal Reserve.
Prudential Financial Inc. (PRU), No. 2 U.S. life insurer, also posted results that exceeded analysts’ estimates. Operating profit of $2.28 a share beat by about 42 cents the average estimate of analysts. The Newark, New Jersey-based insurer posted a net loss of $706 million in the first quarter, fueled by fluctuations in the yen.
In Asia, MetLife’s operating profit rose 11 percent to $333 million as business expanded in South Korea, Australia and India. MetLife purchased American Life Insurance Co., with about 12,500 employees and operations in 50 countries, from insurer American International Group Inc. (AIG) in 2010 to build operations beyond the U.S.
Kandarian agreed in February to buy Chilean pension provider AFP Provida SA in a $2 billion deal to add fee income in Latin America. MetLife has been seeking to add sources of income that don’t depend on returns from stocks and bonds.
Book value, a measure of assets minus liabilities, fell to $57.03 a share as of March 31 from $57.17 three months earlier.
Net investment income, rose to $5.13 billion from $5.08 billion a year earlier. Variable investments, which include private equity and hedge funds, added $337 million before taxes, up from $239 million a year earlier.
In the Americas unit, led by William Wheeler, operating earnings rose to $1.3 billion from $1.16 billion a year earlier, driven by higher investment income and fees in the retail business, as well as expense cuts.
The insurer has set a goal of $600 million in expense savings, mostly in the U.S. MetLife is shifting jobs to North Carolina from sites in the U.S. Northeast and California, the company and state officials said in March.
MetLife has scaled back from some capital-intensive products such as variable annuities to limit risks from falling stocks, and is working to sell more protection products such as accident-and-health coverage. The firm is targeting return on equity of at least 12 percent by 2016, compared with an operating ROE of about 11 percent last year.
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