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MetLife Reports Early, Beats Ests

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Last week, MetLife Inc. (MET - Free Report) came out with its results almost two weeks ahead of the scheduled date, unfortunately reporting a loss in the first quarter of 2012. While filing certain documents to the Securities and Exchange Commission (SEC) to reveal the revised figures for 2011 following the segment reorganization that now show geographical performance, MetLife inadvertently filed its quarterly results.

Preliminary results reflected net operating earnings of $1.49 billion or $1.37 per share as compared with $1.35 billion or $1.23 per share in the year-ago quarter. This also compares favorably with the Zacks Consensus Estimate of $1.30 per share.

However, including extraordinary items, which primarily included losses from derivatives, the company swung to net loss of $94 million or 9 cents per share in the reported quarter. This deteriorated drastically from reported net income of $701 million or 66 cents in the year-ago period.

During the reported quarter, MetLife incurred derivative losses of about $2.0 billion or $1.85 per share, along with investment losses and other items worth $440 million or 41 cents per share. These were partially offset by income tax benefit of $871 million or 81 cents per share, income from discontinued operations of $14 million or 1 cent per share and net income attributable to non-controlling interest of $64 million or 2 cents per share.

Total revenue in the reported quarter climbed 6.9% year over year to $16.69 billion and exceeded the Zacks Consensus Estimate of $16.36 billion. MetLife’s premiums grew 6.7% year over year to $9.11 billion, led by the ALICO acquisition. Fee revenue increased 9.7% to $2.0 billion, while net investment income rose 6.3% year over year to $5.09 billion. Other revenues produced 4.5% year-over-year growth to $489 million.

Meanwhile, MetLife’s total operating expenses ascended 6.6% year over year to $14.6 billion during the reported quarter.

Segment Details

As ALICO has amplified the company’s international presence substantially, in November 2011, MetLife also restructured its revenue streams into three business segments to capitalize on geographic differences: The Americas, Asia and EMEA (Europe, Middle East and Africa). Earlier, the company was divided into the US and International geographical regions. Hence, effective first quarter of 2012, MetLife has started reporting results under the following:

The Americas generated operating revenues of $12.36 billion, up 6.5% year over year. Operating premiums, fees and other revenue increased 7.2% to $8.32 billion. Operating earnings escalated 13.1% year over year to $1.16 billion, reflecting higher claims and benefits.

The segment witnessed modest improvement across annuities, individual and group life along with and non-medical health products although marginal progress was seen in corporate benefit funding. Even Latin America contributed to the growth decently.

Operating revenue from Asia was up 12.0% year over year to $2.94 billion, while premiums, fees and other revenue grew 8.2% to $2.29 billion. Operating earnings surged 32.6% year over year to $297 million, reflecting improved performance from ALICO.

Operating revenue from EMEA rose 8.4% year over year to $1.08 billion.  Premiums, fees and other revenue in this segment climbed 8.7% to $899 million. However, operating earnings declined 6.3% year over year to $74 million, reflecting weakness in Europe along with higher claims, benefits and other expenses.

Separately, Corporate & Other operating revenue plunged 21.2% year over year to $305 million as premiums, fees and other revenue plummeted 22.2% to $105 million. Consequently, an operating loss of $68 million was recorded at $104 million, far wider than a loss of $9 million in the prior-year quarter.

Financial Update

As of March 31, 2012, MetLife’s book value per share excluding accumulated other Comprehensive income (AOCI) increased 10.8% year over year to $46.21. Reported book value (including AOCI) per share escalated 23.5% to $52.94 versus $42.88 at the end of the year-ago quarter.

Moreover, MetLife had total investments of $503.94 billion as of March 31, 2012, down from $511.43 billion at 2011-end. However, cash and cash equivalents surged to $18.67 billion, while total assets increased to $819.60 billion, long-term debt slightly moved down to $23.39 billion and total equity increased to $59.07 billion, from 2011-end.

Outlook for 2012

On December 5, 2012, MetLife announced its projected operating earnings growth to be about 7% year over year in 2012, which is guided in the range of $5.1–5.6 billion or $4.80–5.20 per share based on average shares outstanding of about 1.07 billion. This guidance does not assume share buybacks, which is likely to perk up earnings per share.

Management further evaluated a 5% growth in premiums, fees and other revenues, in the range of $47.3–48.6 billion, for 2012. Going ahead, management estimates revenue to grow by about 20% per year through 2015 in Brazil, Russia, India and China.

Peer Take

Besides, MetLife’s prime peer, American International Group Inc. (AIG - Free Report) , is expected to release its fourth quarter financial results after the market closes on May 3, 2012. Another close competitor, Prudential Financial Inc. (PRU - Free Report) is slated to release its results after the closing bell on May 2, 2012. 

Previously, MetLife had scheduled to release its first quarter 2012 results in the first week of May this year. However, the accidental slip of the results last week has now impelled the company to publicize its complete results after the closing bell on April 26, 2012.

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