Jun. 10, 2014, 6:55 AM
- Apparently tired of waiting for direction from D.C., MetLife (MET) resumes stock buybacks for the first time since 2008 with a $1B repurchase plan.
- CEO Steven Kandarian: "Our philosophy is that excess capital belongs to our shareholders ... We anticipated that the non-bank SIFI capital rules would be known by now, but recent statements by the Fed suggest that we may not see draft rules until 2015. Meanwhile, our capital continues to grow."
- At the current stock price, the buyback would be good for more than 18M shares, or about 1.5% of the float.
- Source: Press Release
Jun. 4, 2014, 10:56 AM
- Providing a particular boost to the large insurers, the Senate today approves a bill giving the Fed the flexibility to tailor capital rules for insurers which may fall under their purview - as opposed to original Dodd-Frank language which could have required a "one size fits all" policy in which insurers would have faced the same capital rules as those applied to largest banks.
- “It is becoming increasingly clear that the Fed will be given the flexibility to tailor its regulation of insurance companies,” says FBR's Ed Mills. “This should be a strong positive for the insurance firms deemed systemically important.”
- Speaking at his company's annual meeting today (webcast and presentation slides), Prudential (PRU +2.7%) Vice Chairman Mark Grier is pleased with the Senate action and says his company can meet any reasonable capital standard.
- MetLife (MET +2.5%), AIG (AIG +0.9%)
Jun. 4, 2014, 10:28 AM
- The life insurance sector mostly in the green after Dai-ichi purchases Protective Life for nearly 1.7x March 31 book value (excluding AOCI).
- Not exactly take-out candidates, MetLife (MET +2.5%) trades for 1.1x book and Prudential (PRU +2.5%) at 1.4x book. Lincoln National (LNC +1.9%) - with a market cap of $13.4B - trades for 1.1x book.
- Others: Primerica (PRI +0.5%), Kansas City Life (KCLI +0.5%).
- Previously: Dai-ichi snaps up Protective Life
Jun. 3, 2014, 1:09 PM
- Yesterday, Thomas Sullivan was named to oversee the Fed's regulation of non-bank systemically important financials, which at this point includes AIG and Prudential (PRU), and may eventually include MetLife (MET).
- Sullivan led the Connecticut Insurance Department from 2007-10, and before that spent more than two decades at Hartford Financial. His new position won't give him final say on decisions affecting the big insurers and their capital requirements, but he will have an important voice.
- "State regulation of insurance has protected insurance consumers and companies from the worst of the financial crisis," said Sullivan to Congress in 2009. "The business of insurance has not created the kinds of unrestrained and unregulated systemic risks that reform efforts seek to manage or prevent.”
- Said "reform efforts" eventually morphed into Dodd-Frank, and insurers (particularly MetLife) are lobbying to either prevent being named SIFIs or, if they are named as such, to prevent them being placed under the same capital regime as banks.
- Previously: Fed hires official to oversee AIG, Prudential
Jun. 2, 2014, 3:51 PM
- Thomas Sullivan - who led the Connecticut Insurance Department from 2007-10 and later worked for PwC - has been hired to oversee non-bank financials which have been designated as SIFIs (so far AIG and PRU, along with GE's finance arm). He starts his job in one week.
- Sullivan fills an expertise gap for the Fed which is used to regulating banks, but doesn't have as much experience with non-banks like major insurers.
- At issue for Sullivan are complaints (led by potential SIFI MET) that capital rules for insurers need to be crafted very differently than those for banks.
- Previously: MetLife lobbies against SIFI designation and capital standards
Jun. 2, 2014, 9:18 AM
- “We truly believe we’re not systemically important,” says MetLife (MET) chief Steven Kandarian, who has embarked on a D.C. blitz to convince regulators not to label the insurer a SIFI, as has been done to AIG and Prudential.
- Regulatory uncertainty - including not just the SIFI designation but what capital rules would follow - has helped make it tough to hit profit targets as a major share buyback continues to be on hold. MetLife, of course, exited its banking operation a couple of years ago, and never received a bailout during the financial crisis.
- Dodd-Frank mandates that bank capital rules must also apply to insurers designated as SIFIs - an idea making little sense, but that never stopped D.C. Maine Senator Susan Collins - who wrote that part of the law - has even said this isn't what she intended, and has sponsored an amendment to revise. Congress has yet to vote on this.
- Far more submissive in these matters is AIG, which knows better after receiving a massive D.C. bailout. "We’re being held to very high standards there and we welcome that," says Peter Hancock, the CEO of AIG's P&C operations.
May 27, 2014, 10:04 AM
- D.C. regulators would make great poker players, says MetLife (MET +2%) CFO John Hale, presenting at a Deutsche Bank conference. They listen and they ask a lot of questions, but they don't give much away as to how they are leaning.
- Hale's comment comes in response to a question about what new capital rules the insurer would face under a SIFI designation. The Fed, he says, doesn't see a way around Dodd-Frank rules which would essentially have MetLife facing the same terms as bank holding companies. For its part, Met has tried to provide the Fed with options, he says.
- Presentation slides
May 15, 2014, 11:43 AM
- Hit particularly hard in today's selloff are the life insurers, whose hopes of beginning to get better returns on their fixed-income investments in 2014 look dashed at the moment.
- Off another six basis points today to 2.48%, the 10-year Treasury yield - above 3% at the start of this year - is all the way back to levels seen last summer.
- Leading the decline is Lincoln National (LNC -6%). Others: MetLife (MET -3.2%), Prudential (PRU -3.7%), Protective Life (PL -3.8%).
- Related ETFs: KIE, IAK, KBWP, KBWI
- Previously: Strong economic data doesn't slow Treasury rally; Wal-Mart in focus
May 14, 2014, 1:18 PM
- In a search for yield, U.S. life insurers have significantly boosted issuance of Funding Agreement Note Issuance Program debt (FANIPs), says Moody's. Insurers use the FANIPs for funding, tilting the investing of the proceeds - given today's low-rate environment - in things like commercial mortgages, public corporate debt, and private placements.
- Popular pre-crisis and stagnant since, "these funding agreement instruments are showing signs of life," says Moody's analyst Rokhaya Cisse. This year through April, issuance is up by about 56% to $8.8B from the same year-ago period. Among the seven insurers which have issued the funding this year are MetLife (MET -1.7%), Principal Financial (PFG -1.4%), and Prudential (PRU -1.6%).
- While Moody's doesn't expect issuance to reach pre-crisis levels, the boosted level "is credit negative because they present liquidity and asset-liability management risks that can emerge during capital markets disruptions."
May 12, 2014, 12:04 PM
- Th sale of a 50% interest to MetLife (MET +1.4%) values the Republic Plaza office building at $480M. Brookfield (BPO) will retain management and leasing responsibilities. Net proceeds to Brookfield are about $98M.
- The property is 95.2% leased with a weighted average remaining lease term of six years. The two largest tenants - Encana Gas & oil and DCP Midstream - occupy just less than 50% of the space.
- Source: Press Release
May 1, 2014, 11:11 AM
- Down more than 3% after an earnings miss last night, MetLife (MET -0.5%) claws back towards break-even on the session, helped by some sell-side defenders. KBW reiterates its Outperform rating on the stock, and Scotiabank, viewing Q1 results as reasonably positive, says Met remains one of its top picks in the life insurance sector. The team's price target is $59.
- Previously: MetLife off 3.3% after-hours on earnings miss
Apr. 30, 2014, 4:19 PM
- Operating earnings of $1.6B off 4% Y/Y, with operating earnings per share of $1.37 off 7%. Book value per share (excluding AOCI) of $49.34 vs. $47.37 a year ago.
- Americas: Operating earnings of $1.3B up 3% Y/Y. Premiums, fees & other revenues of $8.9B up 4%. Latin America: Operating earnings of $183M up 28%, with the ProVida purchase helping. Asia: Operating earnings of $328M fell 2%, but gained 8% on a constant currency basis. EMEA: Operating earnings of $88M up 1%, up 2% on a constant currency basis.
- Net investment income of $5.1B is unchanged.
- CC tomorrow at 8 ET
- Source: Press Release
- Previously: MetLife, Inc. misses by $0.03, misses on revenue
- MET -3.3% AH
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
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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