This summary is based on the fourth quarter fiscal 2007 earnings call conducted by MetLife Inc. (MET) on February 7, 2008.
Management:
Chairman of the Board, President and CEO: Robert C. Henrikson
EVP and Chief Investment Officer: Steven A. Kandarian
EVP and CFO: William J. Wheeler
President, International: William J. Toppeta
Head of IR: Conor Murphy
Key Investors Issues
- EPS were $1.44 a share compared to $4.95 a share last year.
- Net income was $1.08 billion, down from $3.83 billion in the year earlier quarter.
- Revenue rose 7.6% t to $13.83 billion.
Fourth Quarter Highlights
Net income was $1,083 million, or $1.44 per d common share.
In the fourth quarter of 2006, MetLife’s net income benefited from a one time net investment gain of $3 billion, net of income tax, due to the sale of Peter Cooper Village and Stuyvesant Town. This gain contributed to a record quarterly net income of $3,829 million, or $4.95 per common share, for the fourth quarter of 2006. Without this gain, MetLife’s fourth quarter 2006 net income would have been $829 million, or $1.07 per common share.
Premiums, fees and other revenues were $9.1 billion, up 6% from the fourth quarter of 2006.
- Individual variable annuity statutory premiums and deposits in the United States were $3.7 billion, up 13% from the prior period
- Operating earnings were $1,208 million, or $1.60 per common share, compared with $1,054 million, or $1.36 per common share, for the prior period.
Operating earnings in Institutional Business increased 20% to $527 million compared with $441 million in the fourth quarter of 2006 as the segment experienced strong growth in premiums, fees and other revenues in the group life and non-medical health and other businesses due to favorable sales and persistency.
Earnings also benefited from strong investment results across the businesses.
- Retirement & savings operating earnings were $336 million, up 24% from the fourth quarter of 2006. The strong performance reflects wider interest spreads due to strong investment income and lower crediting rates, as well as good underwriting results and lower expenses.
- Operating earnings in non-medical health & other were $98 million, up 32% from the fourth quarter of 2006. The growth in earnings was due primarily to improved underwriting results as well as a 12% increase in premiums, fees and other revenues, including a 15% increase in both dental and disability premiums, fees and other revenues.
- Group life operating earnings were $93 million, compared with $95 million in the prior period. Earnings in the business benefited from a 6% growth in premiums, fees and other revenues as well as higher interest spreads. Earnings for the quarter were impacted by certain non-recurring expenses.
The Individual Business segment had operating earnings of $382 million compared with $415 million in the fourth quarter of 2006.
While earnings declined year-over-year, the segment experienced top-line growth and increases in both variable annuity deposits and total first year life premiums.
- Total life operating earnings were $181 million, compared with $183 million in the fourth quarter of 2006.
- Net revisions to the amortization of deferred policy acquisition costs favorably impacted earnings by $48 million, net of income tax. This was partially offset by mortality liability adjustments.
- Total life first year premiums and deposits grew 27% over the prior period. In addition, sales increased for the third consecutive quarter in all major channels driven by recent systems and service enhancements as well as a focus on key account relationships.
Auto & Home operating earnings were $103 million, compared with $115 million in the prior period.
The segment benefited from favorable non-catastrophe claim development related to prior accident years of $25 million, net of income tax, compared with $52 million, net of income tax, in the prior period. In addition, catastrophe losses were within expectations and lower than the prior period.
International operating earnings were $193 million.
- Fourth quarter 2006 earnings, which were negatively impacted by certain one time items, were $16 million.
- Earnings in the fourth quarter of 2007 reflect sound business results in the Latin America and Asia Pacific regions. In addition, Latin America earnings were positively impacted by a one time liability reduction and related tax benefits, due to pension regulation changes, in the amount of $105 million.
