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By Jason Jenkins

The financial services sector appears to be very scary right now. You have a populist movement in Occupy Wall Street that has brought class warfare into the media forefront. We also have mass uncertainty in the European banking industry due to sovereign debt dysfunction.

But this doesn’t mean that everything in that sector needs to be avoided like the plague.

Just like I’ve tried to do in the housing market, I was looking for plays that make sense in a “traditional” market but in our new reality have been beaten down. And after doing a little research, here’s the case I want to make for MetLife (NYSE: MET).

MetLife Revises Numbers

We’ve seen our share of natural disasters and bad economic news across the globe in 2011, for which MetLife had to bare. Going forward, MetLife now expects premiums, fees and revenue to jump from 31 to 33 percent this year. In dollar terms, revenue will go from $46.3 to $46.8 billion in 2011. For 2012, the company sees that revenue rising about five percent to $47.3 to $48.6 billion.

The company, whose shares rose 3.7 percent in premarket trading when this announcement was made last week, also expects to go back to regulators next month with a revised plan to return capital to shareholders, after its last proposal was blocked. I’ll talk about that a little later.

Growth in International Markets

The company is one the largest insurers in the United States but expects to get its future growth from its international operations – especially from the BRICs.

MetLife has gone through an internal reorganization recently under the leadership of new President, CEO and Chairman-Elect Steven Kandarian. After the acquisition of Alico in 2010, MetLife has established three business units to capitalize on geographic differences: America, EMEA (Europe, Middle East and Africa), and Asia.

The insurer recently reorganized its business units to acknowledge this shift, and it has started spending more aggressively on international branding.

A Revised Plan for the Fed

Because MetLife is a bank holding company, the Federal Reserve has the power to block the company’s capital plans. The Fed did this back in late October.

Kandarian has stated a new plan will be submitted to the Fed this January in hopes of a response by the end of March. They hope in the near future to sell its banking business and shed its holding company status.

What’s to Like About MetLife?

First of all, MetLife expects to have $6 billion to $7 billion in capital in 2012 for dividends and other actions. Analysts have said they expect MetLife to raise its dividend substantially and buy back at least $1 billion in stock.

We like dividends in this crazy market because you want to gain the best possible return for the lowest amount of risk. The buyback indicates that they feel the stock is undervalued. And if you look at MetLife’s tangible book value, it’s pretty undervalued compared to where it’s currently trading.

We can’t forget the 2010 acquisition of American Life Insurance Company (Alico) from AIG for $16.4 billion. This gave MetLife a market cap of $34 billion where Alico makes up almost half it’s the value. Alico operates in more than 50 countries and should contribute significantly to MetLife’s bottom line going forward.

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Source: MetLife: A Gem In A Rough Sector