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MetLife (MET) Rolls Out Annuity Offering to Aid Retirees

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MetLife, Inc. (MET - Free Report) recently teamed up with the renowned Massachusetts-based financial services provider, Fidelity Investments, to devise a fixed immediate income annuity and offer it through the latter’s newly launched retirement income solution, Guaranteed Income Direct. MET’s shares gained 0.3% on Feb 28.

The collaboration also involves middleware provider Micruity, which leverages a single point of service for hassle-free data sharing between insurers, asset managers, recordkeepers and related stakeholders. This, in turn, leads to the easing of administrative burden and an improved user experience of retirement income products.

The new guaranteed income offering of MetLife, named the MetLife Guaranteed Income Program, enables defined contribution (“DC”) plan participants to buy an immediate income annuity from an insurer chosen by their plan sponsors or employers, in this case, and subsequently, annuitize any proportion of their savings. The funds, which will not be utilized for the annuity purchase, stay within the plan.

The assurance of a guaranteed stream of income may prove to be a blessing for retirees, who can plan their everyday expenses, as well as prevent the fast depletion of their savings. This, in turn, is expected to equip them to lead a more financially secure future and infuse greater peace of mind.

Annuitizing one’s savings is a way better option than receiving retirement savings in a lump sum as the latter often has the risk of fast exhaustion of the money and emergence of the need to finance a part of the retirement years. According to a MetLife study, one in three retirees who took a lump sum payment from their DC plan depleted the savings within an average of five years.

Additionally, the passing of the Setting Every Community Up for Retirement Enhancement Act in late 2019 eliminated the fiduciary obstacles encountered in providing lifetime income solutions via the workplace. Hence, there remains an increasing interest of plan participants to opt for these products.

The latest move of expanding access to immediate income annuities therefore can be termed as a time opportune move on the part of MetLife. It may lead to increased utilization of MetLife’s retirement income offering, expand its customer base and fetch higher adjusted premiums, fees and other revenues to the Retirement and Income Solutions segment. Adjusted premiums, fees and other revenues, excluding pension risk transfers, of the unit surged 67.4% year over year in 2023. MetLife boasts a longstanding history and exceptional capabilities in offering retirement income solutions.  

Shares of MetLife have gained 4.8% year to date compared with the industry’s 4.7% growth. MET currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the Multi line insurance space are Horace Mann Educators Corporation (HMN - Free Report) , Assurant, Inc. (AIZ - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) . While Horace Mann sports a Zacks Rank #1 (Strong Buy), Assurant and Hartford Financial currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Horace Mann outpaced estimates in three of the last four quarters and matched the mark once, the average surprise being 15.24%. The Zacks Consensus Estimate for HMN’s 2024 earnings is pegged at $3.15 per share, which has more than doubled from the year-ago reported figure. The consensus estimate for revenues indicates a 9.2% rise from the prior-year reported figure. The consensus mark for HMN’s 2024 earnings has moved 5% north in the past 30 days.

Assurant’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 42.15%. The Zacks Consensus Estimate for AIZ’s 2024 earnings indicates 3.4% growth, while the consensus estimate for revenues indicates a 4.1% rise from the respective prior-year reported figures. The consensus mark for AIZ’s 2024 earnings has moved 6% north in the past 30 days.

The bottom line of Hartford Financial outpaced the Zacks Consensus Estimate in three of the trailing four quarters and matched the mark once, the average surprise being 11.77%. The consensus estimate for HIG’s 2024 earnings suggests a 12.1% improvement, while the consensus estimate for revenues indicates a 9.4% rise from the respective prior-year reported figures. The consensus mark for HIG’s 2024 earnings has moved 2.7% north in the past 30 days.

Shares of Horace Mann, Assurant and Hartford Financial have gained 12.3%, 8.1% and 19%, respectively, year to date.

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