(Bloomberg) — MetLife Inc., the largest U.S. life insurer, said profit climbed 68 percent in the fourth quarter as results improve in the company's home country.
Net income rose to $1.52 billion from $908 million a year earlier, the New York-based insurer said Wednesday in a statement. Operating profit, which excludes some investing results, was $1.38 a share, beating the $1.34 average estimate of 14 analysts surveyed by Bloomberg.
Chief Executive Officer Steve Kandarian, 62, has focused on cutting costs in the U.S. and limiting risks from market-linked retirement products while also expanding overseas. MetLife is targeting return on equity of 12 percent to 14 percent by 2016.
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"They've been transitioning away from capital-intensive annuity-type business to asset-management type businesses," Tom Jalics, an investment analyst at Key Private Bank who helps oversee $25 billion including MetLife shares, said by phone before results were announced. "They've got a diverse business model."
MetLife has declined 6.8 percent this year to $50.41 at 4:03 p.m., while Newark, New Jersey-based rival Prudential Financial Inc. has dropped 12 percent. Results were released after the close of regular trading in New York.
Prudential, the second-largest U.S. life insurer, said Feb. 4 that its quarterly loss widened to $1.46 billion on costs tied to restructuring, currency fluctuations and reserves.
Declining bond yields are weighing on life insurers, which invest in fixed-income assets to back future obligations to policyholders. The yield on the 10-year Treasury has declined this year to about 2 percent.
Bond yields
In a December presentation, MetLife said it assumed the 10-year Treasury would end this year yielding 3.24 percent. At the time, the insurer said that if the rate instead held at 2 percent, earnings this year would be cut by about $80 million this year and $180 million in 2016.
Kandarian also has been contending with the prospect of increased regulation. MetLife was designated systemically important by a panel of U.S. regulators, subjecting the company to increased oversight from the Federal Reserve. The firm filed a court appeal last month against the designation.
MetLife has used deals to bolster international growth, paying about $16 billion to acquire American Life Insurance Co. from American International Group Inc. in 2010. Kandarian more recently acquired Chilean pension provider AFP Provida SA, and he's also struck deals to expand in Vietnam and Malaysia.
At the same time, MetLife has scaled back from businesses where it can't generate profits in line with its goals. The insurer sold a U.K. annuity operation to Rothesay Life Ltd. last year.
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