MetLife's profit grows tenfold in 3rd quarter

AP News
Posted: Oct 27, 2011 6:08 PM
MetLife's profit grows tenfold in 3rd quarter

MetLife Inc.'s acquisition of Alico last year is paying off.

The nation's largest life insurer said Thursday that its net income grew more than tenfold in the third quarter, as Alico helped more than double its international sales. Investment gains also contributed significantly to the improved results.

For the three months ended Sept. 30, the company said it earned $3.55 billion, or $3.33 per share. That's compared with $286 million, or 32 cents per share, in the year-ago period.

Excluding one-time items such as investment gains, the company posted operating income of $1.11 per share. That beat the analyst expectation of $1.05 per share, according to FactSet.

The New York company last spring agreed to pay $15.5 billion for Alico, or American Life Insurance, from American International Group Inc. The purchase was intended to expand MetLife's presence in Japan and high-growth markets in Europe, the Middle East and Latin America. Alico operates in more than 50 countries.

The company also recorded total net derivative gains of $4.2 billion in the quarter. That's compared with a loss of $244 million last year. MetLife uses derivatives to hedge its exposure to risks, such as changes in interest rates and fluctuations in foreign currencies. Movements in those areas cause gains and losses on derivatives for the company.

For the quarter, MetLife said total revenue was $20.46 billion, up from $12.34 billion a year ago. Revenue from premiums and fees hit a record $12 billion, up 41 percent from a year ago.

International operating earnings surged to $578 million, up from $189 million. That reflected on Alico's particularly strong performance in the Latin America and Asia Pacific regions, the company said.

Back at home, operating earnings from its U.S. business was $655 million, down 23 percent, as a result of the increase in insurance reserves and higher catastrophe losses. But sales of annuities in rose 79 percent to $9.2 billion, driven by a strong demand for variable annuities.

Premiums, fees and other revenue in the U.S. business was $7.7 billion, up 9 percent primarily because of growth in corporate benefit funding and retirement products

The company's investment portfolio was $493.2 billion at the end of the quarter, up from $383.2 billion a year ago. The increase was also largely due to the acquisition of Alico

The stronger third-quarter results came two days after MetLife said the Federal Reserve blocked its plans to increase its dividend and repurchase stock from shareholders. The insurance company needs approval from the Fed because of its ownership of MetLife Bank. The Fed concluded that the company's plans should be tested under the next round of stress tests, scheduled for next year.

Shares of MetLife rose $1.03, or 2.9 percent, at $36.70, in after-hours electronic trading, after closing up $2.48, or 7.5 percent, at $35.67.