MetLife Forecasts Disappointing 2007 Operating EPS

Shares of U.S. life insurance company MetLife were off 2.2% to $64.98 Wednesday after the company provided 2007 earnings guidance below expectations. The company is projecting full-year operating earnings (which exclude investment gains and losses) in the $5.05-5.30 range. Last year, the company posted operating earnings of $5.21. Analysts had been expecting $5.46. MetLife also forecast 2007 return on equity of 12.1-12.7%, shy of prior analyst expectations of 12.75%. In an SEC filing ahead of an investor presentation (see link to slide show below), the company said it reduced its exposure to the residential mortgage-backed securities market by 25% between late 2005 and Q1 2007, and classified its exposure to subprime lenders as "minimal." The company holds $2.6 billion worth of higher quality collateral. According to CEO C. Robert Henrikson, MetLife will likely benefit from changes in accounting rules and pension legislation. At the presentation, CFO William J. Wheeler said MetLife might be interested in making acquisitions. "We are in a lot of different businesses domestically and we like almost every business we are in, so there are a lot of potential targets," he said. Dow Jones mentions Unum Group as a potential target.

Sources: Reuters, Forbes, Dow Jones
Commentary: 1Q07 Insurance Earnings: What's Working, What's Not • MetLife Beats Street on Operating EPS • Big Pay Day for MetLife: NYC Property Sells for $5.4 Billion
Stocks/ETFs to watch: MetLife, Inc. (MET), Unum Group (UNM) Competitors: Allianz SE (AZ), American International Group, Inc. (AIG), Prudential Financial Inc. (PRU). ETFs: KBW Insurance ETF (KIE), iShares Dow Jones US Insurance (IAK), Rydex S&P Equal Weight Financials (RYF)
Related: MetLife SEC filing (slide show)

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