This summary is based on the fourth quarter fiscal 2006 earnings call conducted by MetLife Inc. (MET) on February 14, 2007
Key Investor Issues:
- Net income was $3.8 billion, or $4.95 per share, up from 461% from $677 million, or 88 cents a share in the prior year.
- Earned record total premiums, fees and other revenues of $8.6 billion, up 10% from the prior year period
- It completed the sale of Peter Cooper Village and Stuyvesant Town for $5.4 billion.
Full Year Highlights
- The company earned record total premiums, fees and other revenues of $32.6 billion, up 9% from the prior year
- Metlife grew its book value per diluted common share, excluding accumulated other comprehensive income, 19% from the prior year to $39.76 per diluted common share.
- Operating earnings were $4 billion, or $5.21 per diluted common share, compared with $3.3 billion, or $4.33 per diluted common share, for 2005.
Fourth Quarter Highlights
Net income was $3.8 billion, or $4.95 per share, up from 461% from $677 million, or 88 cents a share in the prior year driven primarily by growth in the business, a higher asset base and strong investment income.
- Revenues rose 11.8% to $12.9 billion from $11.5 billion in 2005 following strong performance from premiums and fees and other revenues, up 13%.
- The firm harvested $3 billion of capital gains from the real estate portfolio by selling Peter Cooper Village and Stuyvesant Town into the hottest market in real estate history.
- The firm repurchased 8.6 million shares of common stock at an aggregate cost of approximately $500 million.
Segment Overview:
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Institutional Business operating earnings were $441 million, up 13.4% from $389 million in the prior year period as the segment delivered strong top line growth and also benefited from higher net investment income.
- The increase in earnings was slightly offset by a charge of $16 million, net of income tax, which represents costs associated with a previously announced regulatory settlement.
- Retirement & savings earnings were up 30% compared with the prior year, primarily due to higher interest spreads as the business benefited from strong net investment income and a 7% increase in the general account asset base.
- During the quarter, the general account and separate account balances for retirement & savings reached a combined record of $117.6 billion.
Non-medical health & other earnings increased 21% due to growth in the business and favorable net investment income.
- Non-medical health & other premiums, fees and other revenues were up 8% over the prior year period, reflecting growth across all product lines, especially in dental and disability.
- Group life earnings of $95 million were down compared with the prior year period.
- Underlying growth in the business and stronger interest spreads were offset by higher expenses, including the above-mentioned charge.
Individual business posted operating earnings of $415 million, up 33% over the previous year quarter due to excellent spreads, good investment performance, and favorable underwriting margins.
- This increase was due, in part, also to growth in the business, and an increase of $35 million, net of income tax, due to deferred acquisition cost adjustments in the life and annuity businesses.
- Total life earnings almost doubled as the business benefited from favorable mortality and higher net investment income.
- Total life first year premiums and deposits were down compared with the prior year period due primarily to a decline in universal life sales in the independent channel.
Annuity earnings hit a record 230 million, up 10% over the prior year primarily driven by favorable investment results, growth in the business, and favorable one-time items.
- Total annuity premiums and deposits were 3.7 billion for the quarter, up 3% over year and 4% sequentially.
- However, total annuity net flows dropped sequentially as a result of higher fixed annuity lapses.
- Net flows associated with variable annuities were relatively flat.
Auto & Home reported earnings of $115 million and for the year at $414 million from $81 million in the previous year driven by favorable claims development related to prior year accident reserves and lower automobile claim frequencies offset somewhat by higher than claimed catastrophes.
- Sales in the quarter were strong, up 12% versus prior year.
- Operating earnings for international were $15 million, down 69% year-over-year, due to the unusual charges taken in Taiwan,
- In Japan, there were record sales, and MSI MetLife became the second largest seller of annuities through the bank channel with $1.6 billion in sales.
- Stronger sales in Korea and Mexico helped international revenues by 21% over the last-year period.
- In international, start-up expenses associated with U.K. annuity operations and restructuring in Taiwan increased expenses by $41 million pre-tax.
In institutional business, revenues were up 13% and group revenue growth was solid at 7.1%, retirement and savings revenues were up 65.8% as a result of higher structured settlement sales and several pension closeouts.
- Retirement and savings general account liabilities grew by $2.6 billion, which is a 12.7% annualized growth rate.
- In institutional group life mortality was at 92.1% for the quarter.
- Disability morbidity ratio was 95.2% for the quarter, essentially at the top of the target range.
A variable investment income of $123 million was realized after DAC, tax, and other offsets.
