Bellwether Metlife Issues A Warning Signal To Its Own And S&P 500 Investors

Nov. 25, 2013 5:51 PM ETMetLife, Inc. (MET)SPY8 Comments
David White profile picture
David White

MetLife (NYSE:MET) is a leading global provider of insurance, annuities and employee benefit programs. It serves approximately 90 million customers. It (and its subsidiaries) operate in the US, Japan, Latin America, Asia, Europe, the Middle East and Africa. It counts over 90 of the top 100 Fortune 500 companies among its corporate clients. It is the largest life insurer in the US and Mexico. It pays a substantial and dependable 2.10% dividend.

As one of the largest US insurers it is considered a bellwether and it has not disappointed in that respect over the last year. In the latest quarter (Q3 2013) it reported a 6% increase in operating earnings year over year to $1.5B. However, on a per share basis they were only up 2% due to the conversion of equity units issued in 2010 to fund the Alico acquisition. Operating earnings were up 7% in the Americas and 37% in EMEA (Europe, the Middle East and Africa), although EMEA earnings were up only 28% on a constant currency basis. Operating earnings were down -1% in Asia, but they increased +7% on a constant currency basis. MetLife reported net Q3 2013 income of $942 million. Since this included -$355 million in after tax derivatives losses, operationally it was an excellent quarter. Book value was up from $47.70 per share at Q3E 2012 to $47.99 at Q3E 2013.

This all sounds great. Why do I say MetLife has issued a warning signal? Simply MET announced that it was no longer going to provide earnings guidance. To me this means that MetLife is very unsure of what the future holds. It means that it sees a considerable chance for a downturn in its business and in the overall US and world economies. MetLife does not want to be sued for misleading investors with probably erroneous information

This article was written by

David White profile picture
David White is a software/firmware/marketing professional and a long time investor. He has worked in the networking field, the semiconductor equipment field, the mainframe computer field, and the pharmaceutical/scientific instrumentation field. He has bachelor's degrees in bioresource sciences and biochemistry from U.C. Berkeley. He is a former Ph.D. student in biochemistry. He has done significant graduate work in EECS and business at Stanford (through SITN) and UC Santa Cruz. He was awarded a Certificate in Advanced Software Systems (about 1/3 of an MS in EECS) by the Stanford Computer Science Department. He also took most of Stanford's undergraduate Computer Science curriculum. He has been nominated for many separate Nobel Prizes (Economics and Peace). He was a small part of a team that won the Nobel Prize in Medicine. He provided the theory for a different nomination for a Nobel Prize in Medicine/Physiology. He came extremely close to winning the 2014 Nobel Prize in Economics. There are about 3000 nominations for each prize; but since the same people are often nominated multiple times the 3000 nominations lead to only about 250 to 350 nominees worldwide in a given year. With about 7.5B people in the world, the odds of getting multiple Nobel nominations are about (4 x 10**-8)**n where n is the number of distinct nominations.

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