MetLife Is Properly Positioned For 2019

Dec. 17, 2018 8:25 AM ETMetLife, Inc. (MET)8 Comments
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WG Investment Research


  • MetLife recently held its annual outlook meeting and, in my opinion, the main takeaway from the presentation was that the bull case for this insurer remains intact.
  • Specifically, MetLife appears to be properly positioned for 2019 and beyond.
  • I am long MetLife, and I plan to stay long the stock.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

MetLife's (NYSE:MET) stock has fallen out of favor over the last few quarters, which is shown by the fact that its shares are underperforming the broader market by approximately 24 percentage points on a YTD basis.

ChartMET data by YCharts

However, the important thing to remember is that the stock has performed pretty much in line with the other insurers (and in a broader context, the financials in general), as this sector has faced significant downward pressure due to industry concerns.

ChartMET data by YCharts

However, as I recently described here, I believe that MetLife's stock is trading at attractive levels and is worthy of investment dollars, of course, if you are willing (and able) to hold onto shares for the next two to three years.

Properly Positioned for 2019

Management recently held its annual outlook meeting and, in my opinion, there were some great takeaways from the presentation. Most importantly, management believes that this global insurer is properly positioned for 2019 and beyond. To start, MetLife has a large diversified asset portfolio that puts the insurer in a great position to be successful in most economic environments.

Source: MetLife's Outlook Call Presentation

MetLife's asset base gives management the opportunity to pull several different levers in 2019, which will be especially important if the market remains volatile over the next 12-18 months. To this point, management's strategy is to now focus on less capital-intensive products that also have shorter payback periods, which improves the company's overall earnings profile. As a direct result, the return on equity, or ROE, target was increased to a range of 12-14%. Furthermore, management still stands by its goal of reducing expenses by $800M by 2020.

And management expects to achieve its previously communicated free cash flow ratio target of 65% to 75% of adjusted earnings not only

ChartMET Price to Book Value data by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long MET. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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