Apr. 30, 2014, 4:07 PM
Apr. 22, 2014, 11:18 AM
- MetLife (MET +1.6%) is the strongest gainer in the life insurance sector after boosting its quarterly dividend by 27.3% to $0.35 per share. "Today's action by MetLife's board highlights our focus on returning capital to shareholders," says Chairman and CEO Steve Kandarian.
- The move comes as a frustrated management awaits word from D.C. on whether it will be designated a SIFI, and over just what the capital rules will be for insurers.
Apr. 22, 2014, 10:37 AM
Apr. 16, 2014, 3:18 PM
- Alongside Barclays' Jay Gelb's upgrade of Lincoln Financial (LNC +2.3%) to Overweight is a downgrade of Reinsurance Group of America (RGA -0.3%) to Equal Weight and cut in the price target to $81 from $88, citing increased competition in the life reinsurance market.
- For Lincoln, Gelb has boosted confidence in the company's ability to generate strong earnings growth despite the low interest rate environment.
- His top picks in the sector remain Prudential (PRU +1.6%), MetLife (MET +0.8%), Aflac (AFL +1.5%), and Protective Life (PL +1.2%), and he has a "positive outlook" on AIG and Hartford Financial (HIG +1.4%).
- "AFL has a top-tier ROE as well as robust share buybacks, and should benefit in 2015 from the Japan Post partnership," writes Gelb, noting yen weakness will hurt GAAP earnings, but the company has hedged profit repatriation back to the States. AIG and HIG, he says, "should deliver substantial share buybacks along with attractive valuations and ultimately higher ROEs."
- ETFs: KIE, IAK, KBWI, KBWP
Apr. 7, 2014, 7:39 AM
Apr. 3, 2014, 3:34 PM
- Improvement in the economy and the expectation of higher interest rates are behind Moody's lifting its outlook on MetLife (MET +0.5%) to stable from negative. The agency also affirms the insurer's A3 credit rating.
- "Over the past year, positive momentum has been attained at the company in lowering risk related to variable annuity guaranteed benefits, improving capital transparency relating to its 'onshoring' of its captive insurers. and shifting away from higher risk and capital intensive products in favor of fee-based and protection businesses."
Apr. 2, 2014, 4:26 AM
- Blackstone (BX) is reportedly in discussions to sell six office properties in the Boston area for $2.5B, with potential buyers including MetLife (MET).
- Separately, Blackstone has agreed to acquire a 49% holding in an office property in San Francisco called One Market Plaza in a deal that values the two-tower complex at just over $1.2B. Blackstone is purchasing the stake from Paramount Group, which will continue to own the rest of the property.
- The deal is Blackstone's second in what it considers core and core-plus real estate, which refers to low-risk, well-leased buildings in major markets that provide a stable return.
Apr. 1, 2014, 7:20 AM
Mar. 31, 2014, 2:55 PM
- New York's Department of Financial Services charged MetLife (MET +0.8%) subsidiaries ALICO and DelAm with using Manhattan-based personnel to solicit business even though neither company was licensed to do so in New York. Both units were purchased from AIG in 2010, and there is an ongoing investigation of that company and the subsidiaries before the sale.
Mar. 27, 2014, 2:28 PM
- Struggling one day after the CCAR results are insurers AIG (AIG -0.9%), MetLife (MET -2.3%), and Prudential (PRU -2.6%). The group wasn't part of the CCAR process, but is potentially under the thumb of the Fed as it relates to capital returns.
- If there is one takeaway from the CCAR, it's that the Fed - if anything - is getting even tougher with the larger institutions as it relates to capital returns. Citigroup was rejected and BofA and Goldman - facing rejection - were forced to dial back plans and resubmit their requests. "CCAR highlighted the challenges large-caps have in returning excess capital," said Goldman's Richard Ramsden earlier today.
Mar. 25, 2014, 9:46 AM
- "We share your frustration," writes MetLife (MET +1.2%) CEO Steve Kandarian in his letter to shareholders in the company annual report. “It is taking much longer for clarity on the capital rules than anyone had anticipated."
- Met currently awaits word from the nation's capital on whether it will be designated a systemically important financial institution. Kandarian doesn't believe the company poses a threat to the financial system, but if it is deemed so, than the Fed should impose rules designed for insurers, not banks.
- “If federal capital rules for life insurers do not appropriately reflect the business model of insurance, we could be forced to raise prices to consumers or exit markets entirely ... Regulators in Washington must recognize that imposing higher capital requirements on certain life insurance companies is not cost-free.”
- Met did boost its dividend about a year ago and did buy Malaysia's AmLife and Chile's Provida, but the insurer hasn't bought back shares in a number of years.
Mar. 19, 2014, 3:13 PM
- A check of sectors following the FOMC statement and updated projections suggesting a quickened pace of rate hikes in the future finds the banks and life insurers notably moving higher. Both groups have struggled earning a spread amid ZIRP and are positively levered to higher rates.
- Lenders: Bank of America (BAC +1%), Citigroup (C +1%), JPMorgan (JPM), Regions (RF +1.7%), KeyCorp (KEY +0.9%), SunTrust (STI +0.7%).
- Life insurers: MetLife (MET +1%), Prudential (PRU +0.7%), Lincoln National (LNC +1%).
- Related ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, KIE, SEF, IYG, IAK, FXO, PFI, KBWB, FNCL, FINU, RWW, RYF, PSCF, KBWP, KBWI, FINZ, KBE, KRE
- Not necessarily positively levered to higher rates are the mortgage REITs (REM -1.6%): Annaly (NLY -1.8%), American Capital (AGNC -1.7%), (MTGE -1.9%), Armour (ARR -1.3%), Two Harbors (TWO -2%) CYS Investments (CYS -3.3%), Capstead (CMO -1.3%), MFA (MFA -1.8%).
- Related ETFs: MORT, MORL
Mar. 18, 2014, 11:04 AM
- Half a million doesn't buy much anymore. House Ways and Means Committee Chairman Dave Camp (R, Mich.) - a sizable recipient of Wall Street donations - has the large financial institutions displeased with his proposal to levy a tax on them. He says they deserve to pay up for the lower borrowing costs they receive because of their perceived government backstop, a notion the banks dispute.
- The proposal is part of larger tax reform expected to get serious discussion after the mid-term elections, and a Camp spokeswoman says the overall plan will make banks "some of the biggest winners."
- In discussions to hold a fundraiser for the NRC, Goldman Sachs (GS +0.9%) reportedly opted out over its concerns. Smaller bankers join in with their much larger brethren: "We're going to beat this like a rented mule," says Cam Fine, who heads the Independent Community Bankers Association. "This is a united effort."
- Camp's tax would apply to financial firms with assets greater than $500B, levying a 0.035% tax on total assets each year. Among those affected (in addition to Goldman) are AIG, BAC, C, GE Capital, JPM MET, MS, PRU, and WFC. The largest could pay more than $2B per year under the plan.
Mar. 11, 2014, 12:40 PM
- The insurance industry finds an ally in Maine Senator Susan Collins who introduces an amendment to Dodd-Frank seeking to clarify new capital rules for nonbank financials.
- Insurance companies have made the case they're not banks and already meet state-imposed leverage requirements, and thus shouldn't be subject to the same rules as banks, and the Fed - now a regulator of AIG and PRU, and maybe MET soon as well - has asked for guidance about whether Dodd-Frank allows it leeway.
- Not a member of the Senate Banking Committee, Collins testified the Fed does indeed have flexibility and her bill seeks to make that clear.
- Related ETFs: KIE, IAK, KBWI, KBWP
Mar. 8, 2014, 9:33 AM
- "MetLife (MET) is one of the cheaper stocks in a sector that is, itself, cheap relative to the market," says Eric Hagemann, an analyst at Richard Pzena's Penza Investment Management (an owner of the shares). A check of price/book (excluding investment gains) finds Met at 1.1x - grouped with Hartford (HIG) at 0.9x and Lincoln Financial (LNC) at 1.1x - but well less than Prudential's (PRU) 1.6x.
- Why the discount? Met is one of few remaining large financials not yet buying back any stock as it awaits direction from D.C. (which isn't expected until late this year or early next). In same boat, AIG and Prudential have both thrown caution to the wind and begun repurchases.
- On the other hand Met has boosted its dividend to $1.10 per share annually and the payout could approach $1.50 in 2015. There was also last year's $2B acquisition of Chilean pension fund provider Provida. If the new regulatory capital rules are too onerous, a breakup of Met into domestic and international businesses is a possibility.
- "In a record stock market, MetLife offers a nice package for investors: a rock-bottom P/E and price/book ratio, an attractive global franchise, and a financially astute management team," writes Andrew Bary.
Mar. 7, 2014, 9:42 AM
- The life insurers open strongly in the green as interest rates shoot higher following this mornings jobs report. Up the most is Prudential (PRU +3%) after BAML upgrades to Buy and boosts the price target to $103 from $94.
- The team views PRU's valuation as attractive after its sluggish start to the year - off 6% vs. a 1% increase in the median life name. There's also increased confidence the company can sustain an ROE above 14%, and a rising equity market means a lower cost of capital for the industry.
- Noting PRU's status as a SIFI, BAML takes a conservative view towards buybacks, assuming just $500M over the next five quarters. "However, we would not be surprised if PRU continued its current $1B a year pace of buyback, which we believe would help support the ROE."
- Others: MetLife (MET +2.1%), Lincoln National (LNC +2.2%), ING U.S. (VOYA +1.1%), Protective Life (PL +1.3%).
MET vs. ETF Alternatives
MetLife Inc is a global 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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