Nov. 19, 2014, 10:05 AM
- Valuation and the stock's lagging performance make Prudential (PRU +0.1%) a relative bargain, says the team, with the company's analyst day on December 11 a possible catalyst to move shares higher.
- Prudential is down 8.8% YTD, lagging names like Hartford (NYSE:HIG), MetLife (NYSE:MET), AIG, and Lincoln National (NYSE:LNC) by anywhere from 1K to 2K basis points.
Nov. 17, 2014, 8:57 AM
- More than a year ago, MetLife (NYSE:MET) announced it would merge three life insurance subsidiaries with an offshore reinsurance subsidiary as part of a larger effort improve the risk profile and transparency of the variable annuity business.
- The merged company - which includes MetLife Insurance of Connecticut, MetLife Investors USA, MetLife Investors Insurance, and Exeter Reinsurance - has been named MetLife Insurance Company U.S.A. and is domiciled in Delaware.
- Source: Press Release
Nov. 10, 2014, 2:33 PM
- "The failure of any institution with $1T in assets could do serious damage to the financial system," writes the FT's Lex Team. "MetLife (MET +0.1%) fully deserves its SIFI status."
- D.C. regulators argue a run on a large insurer, say a mass cash out of life policies, would disrupt the financial system, but MetLife says a mass surrender of policies is not possible due to their nature. Further, many annuity and life policies can be cashed out only by incurring significant penalties.
- Fair enough, writes Lex, agreeing that insurers should not be regulated like banks, but reminding this does not exempt them from closer regulatory scrutiny. "Regulators should regulate for the next crisis, not the last one."
- Previously: MetLife to meet regulators to avoid "systemic" tag
Nov. 6, 2014, 3:47 PM
- One week after MetLife (NYSE:MET) said it's wary of the largest pension deals at current prices, Prudential (NYSE:PRU) - on its earnings call today - defended its policy of going after them.
- Prudential, says COO Stephen Pelletier, can distinguish itself through an ability to handle complex transactions and deal with thousands of retirees. Looking at Prudential's recent taking on of $3.1B in pension liabilities from Motorola, Citi's Erik Bass queried management on why Motorola isn't paying a premium when most firms pay in the area of 5-15% of the liabilities transferred.
- Pelletier responded that plan sponsors can use different approaches to quantifying liabilities, with discrepancies sometimes arising from the use of different mortality tables. "That's all pretty much irrelevant to us ... We use a consistent and very disciplined methodology with multiple layers of oversight in order to arrive at our customized view from the ground up of the economic risks that we’re taking on in a given transaction.”
- "We think PRU’s management addressed well and head-on the continued concerns voiced both by investors and a few competitors over the pricing and returns of its pension risk transfer business,” says Sterne Agee's John Nadel. “Although we expect doubts will likely persist.”
- Prudential is lower by 4.5% after missing earnings estimates last night.
- Previously: Prudential -2.15% after earnings miss
Nov. 3, 2014, 4:59 AM
- MetLife (NYSE:MET) is due to meet the Financial Stability Oversight Council (FSOC) today in another bid to persuade regulators not to classify the insurer as "systemic."
- Should MetLife receive the designation, it would face scrutiny from the Fed and have to hold high capital levels.
- "MetLife has a strong case on the substance...but the FSOC is not likely to listen," says former Treasury official Phillip Swagel, who's now at the University of Maryland School of Public Policy.
- The FSOC has sixty days to make a decision, which MetLife could then challenge in court if it's unsatisfied.
Oct. 29, 2014, 4:33 PM
- Q3 operating earnings of $1.8B up 22% Y/Y. Operating EPS of $1.60 up 19%.
- Book value per share excluding AOCI of $49.69 up 7% Y/Y.
- Americas operating earnings of $1.5B up 14% Y/Y. Retail earnings of $699M up 6%. Group, Voluntary, & Worksite Benefits of $237M up 5%. Corporate Benefit Funding of $408M up 37%. Latin America of $152M up 22% on a constant currency basis.
- Asia operating earnings of $306M up 19%. EMEA operating earnings of $96M up 13%.
- Net investment income of $5.2B up 4%.
- Conference call tomorrow at 8 ET
- Previously: MetLife beats by $0.22, beats on revenue
- MET +1.8% AH
Oct. 29, 2014, 4:11 PM
Oct. 28, 2014, 5:56 PM
Oct. 23, 2014, 11:03 AM
- Still waging the last war, the regulatory generals of Basel have completed drafting "the first-ever global insurance capital standard." Beginning in 2015, nine companies which have been decreed as systemically important by the FInancial Stability Board (this is different than the U.S.'s SIFI-designation), will report a "basic capital requirements" ratio on a confidential basis.
- The next stage set for the end of 2015 is the definition of "higher loss absorbency" requirements.
- Among the list of nine: AIG, Allianz (OTCQX:AZSEY), MetLife (NYSE:MET), Axa (OTCPK:AXAHF, OTCQX:AXAHY), and Prudential (NYSE:PRU).
Oct. 20, 2014, 3:52 PM
- "Based on my experience as an insurance regulator, and a regulator of one of MetLife’s (MET +0.5%) larger insurance subsidiaries, I do not believe that MetLife’s businesses and corporate structure create the kind of systemic risk that Dodd-Frank’s SIFI designation process was designed to address," says Delaware Insurance Commissioner Karen Weldin Stewart in a letter to the U.S. Treasury Secretary and other federal regulators.
- To review, the Financial Stability Oversight Council last month proposed designating MetLife as systemically important, a decision the insurer (not to mention logic) has taken serious issue with. Still ahead is a hearing in which MetLife would be able to challenge the FSOC.
- Stewart is not the first state regulator requesting the Feds stay off his/her turf. That would be New York's Ben Lawsky. Stewart, however, goes further, noting MetLife already faces thorough oversight in any state where it does business and no longer engages in any significant non-insurance activities.
- "Another layer of oversight over MetLife’s activities is redundant, unnecessary and will only serve to impede the quality of service MetLife provides to its customers and the value it delivers to its shareholders."
Oct. 20, 2014, 2:53 PM
- Analysts Joshua Shanker and Phil Stefano still don't love the company, noting a bloated expense structure, high reliance on positive capital markets trends, and a high-profile trial alleging AIG didn't act in shareholder interest when it accepted a government bailout, but the stock has declined enough of late to make it a bargain even with those negatives.
- "The financial engineering at the company currently makes up for the shortcomings in its operational performance," they say. "We believe that has been true for the last three years, and will continue to be true for the foreseeable future." Should the operational issues get resolved, look out above.
- The duo also remind that AIG isn't the only insurance stock taking a beating of late, and Ameriprise FInancial (AMP +0.6%), MetLife (MET +0.5%), and Prudential (PRU -0.4%) have taken even bigger hits. Exposure to 10-year interest rates is the reason, they expect, pointing to P&C insurers which haven't fallen nearly as far.
- Previously: Deutsche buys the dip in AIG
Oct. 15, 2014, 10:49 AM
- Bank earnings models will no doubt need to be tweaked as the sure thing of higher rates becomes somewhat less sure, with the 10-year U.S. Treasury yield plunging all the way down to 2%, and 30-day Fed Funds futures - just weeks ago pricing in 100% chance of a rate hike by June 2015 - now sees no move until December 2015.
- The XLF is lower by 1.9% and the Regional Banking ETF (NYSEARCA:KRE) is down 2.1% (the S&P 500 is off a mere 1.1%). Among individual names, KeyCorp (KEY -6.4%), First Bancorp (FBP -6.4%), Regions Financial (RF -4%), U.S. Bancorp (USB -2.2%), Fifth Third (FITB -2.6%), Bank of America (BAC -4%), Citigroup (C -3.3%), JPMorgan (JPM -2.8%), Wells Fargo (WFC -1.9%).
- Financial ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, FINZ, KRS
- Life insurers were also waiting on higher rates and they're slipping more than the averages as well. MetLife (MET -3.7%), Prudential (PRU -2.9%), Manulife (MFC -3.5%) Sun Life (SLF -3.4%), Lincoln Financial (LNC -3.9%).
- Insurance ETFs: KIE, IAK, KBWP, KBWI
- Previously: BofA call: Assumption about higher rates not so sure anymore
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 9, 2014, 9:03 AM
- Three months ago, the two companies went public with plans to develop an initial portfolio of eight state-of-the-art industrial facilities across four states and totaling nearly 6M square feet.
- Project #2 announced today is three industrial distribution parks in the Seattle area for nearly $63M. The sites will add more than 900K square feet of warehouse space to the region.
- MetLife (NYSE:MET) will be the majority owner and Panattoni will be the managing minority partner.
- Source: Press Release
Sep. 30, 2014, 3:14 PM
- Insurers (mostly MetLife MET, the others are at least publicly keeping their lips zipped) are not pleased about being subject to capital rules designed for banks.
- The so-called quantitative impact study (QIS) will take input from the insurers as its attempts to figure out the impact on them of the new banking regulations.
- Others of interest include AIG and Prudential (NYSE:PRU).
Sep. 17, 2014, 3:16 PM
- Leading markets higher as the reality of higher interest rates gets nearer is the financial sector (XLF +0.9%). Whether its banks, brokerages, or insurers, a higher benchmark rate for some time has been considered a key bullish catalyst. An especially large move is being seen in the online brokerage names who have been forced to forego money market fees for years thanks to ZIRP: E*Trade (ETFC +3%), Schwab(SCHW +3.2%), Ameritrade (AMTD +2%).
- Morgan Stanley (MS +1.8%), Bank of America (BAC +1.2%), JPMorgan (JPM +0.9%)
- U.S. Bancorp (USB +1.1%), Regions Financial (RF +2%), New York Community Bank (NYCB +0.8%), Huntington Bancshares (HBAN +1.3%), KeyCorp (KEY +1.3%)
- MetLife (MET +0.6%), Voya Financial (VOYA +0.7%).
- Chubb(CB +0.4%), AIG (AIG +1.1%), Hartford (HIG +0.8%)
- Financial sector ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, SEF, IYG, IAK, FXO, KBWB, FNCL, RKH, QABA, FINU, KRU, KBWR, RWW, KBWP, RYF, KBWI, KRS, FINZ
MET vs. ETF Alternatives
MetLife Inc is a provider of insurance, annuities & employee benefit programs in United States, Japan, Latin America, Asia, Europe & Middle East. It offers life insurance, annuities, property & casualty insurance, and other financial services.
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