MetLife Releases 4Q and FY 2011 Earnings

MetLife has reported fourth quarter 2011 net income of $1.1 billion, or $1.06 per share, and operating earnings of $1.4 billion, or $1.31 per share.

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MetLife also reported full year 2011 net income of $6.7 billion, or $6.29 per share, and operating earnings of $5.4 billion, or $5.02 per share.

"MetLife had a solid year and a strong fourth quarter, even in the face of some significant market pressures," said Steven Kandarian, chairman, president and chief executive officer of MetLife. "We delivered higher earnings per share over 2010. Our capital position is strong and getting stronger. And our ability to grow operating earnings in the face of low interest rates remains intact. In short, we think we're the best-positioned company in the life insurance sector to deliver shareholder value."

In a release on February 14, the Company noted:

Full Year 2011 Summary

-Operating earnings of $5.4 billion, or $5.02 per share, up 40 percent over 2010

-Premiums, fees and other revenues of $45.7 billion, up 32 percent over 2010

-Total assets of nearly $800 billion, up 9 percent from year-end 2010

Fourth Quarter 2011 Summary

-Operating earnings of $1.4 billion, or $1.31 per share, up 17 percent over the fourth quarter of 2010

–Total International sales up 12 percent compared with combined MetLife and Alico fourth quarter 2010 results

-Premiums, fees and other revenues of $11.5 billion, up 23 percent over the fourth quarter of 2010, largely due to the acquisition of Alico as well as growth in the U.S.

-Book value per share of $54.59, up 24 percent from year-end 2010

Business Discussions

On Nov. 21, 2011, MetLife announced it was reorganizing into three broad geographic regions – The Americas, EMEA (Europe, the Middle East and Africa) and Asia – to better reflect the company's global reach. MetLife expects to report financial results under this new structure beginning with the first quarter of 2012.

During the fourth quarter of 2011, MetLife began reporting certain operations of MetLife Bank and insurance operations in the Caribbean Region, Panama and Costa Rica as divested businesses. These operations are excluded from operating earnings as well as investment portfolio and derivative gains and losses. Prior periods have been reclassified to conform with the current period segment presentation.

U.S. Business

-U.S. Business operating earnings of $932 million, up 4 percent; the annual review of deferred policy acquisition costs assumptions and other adjustments resulted in a net $27 million, or $0.03 per share, after tax, increase in U.S. Business operating earnings

-Favorable underwriting results in group life and continued improvement in non-medical health underwriting, particularly in the dental business

-Variable annuity sales of $7.2 billion

-Premiums, fees and other revenues of $7.6 billion, up 7 percent primarily due to growth in Retirement Products and Corporate Benefit Funding

Insurance Products

Operating earnings for Insurance Products – which includes group life, individual life and non-medical health insurance – were $411 million, up 33 percent largely due to the positive impact of DAC and other adjustments in individual life as well as favorable underwriting results in group life and non-medical health. Premiums, fees and other revenues for Insurance Products were $5.1 billion, relatively unchanged.

Retirement Products

Operating earnings for Retirement Products – which includes the company's U.S. annuity products – were $216 million, down 5 percent due to the negative impact of DAC and other adjustments as well as lower variable investment income, offset by growth from strong positive net flows and higher core spreads. Compared with the fourth quarter of 2010 and the third quarter of 2011, total annuity sales increased 41 percent and declined 15 percent, respectively, primarily due to a change in the level of variable annuity sales. Premiums, fees and other revenues for Retirement Products were $1.0 billion, up 35 percent due to increased sales of immediate annuities and higher fee income.

Corporate Benefit Funding

Operating earnings for Corporate Benefit Funding – which includes the U.S. and U.K. pension closeout businesses, structured settlements and other benefit funding products – were $224 million, down 21 percent primarily due to lower variable investment income. Premiums, fees and other revenues for Corporate Benefit Funding were $739 million, up 44 percent largely due to higher pension closeout sales (which often fluctuate significantly from quarter to quarter).

Auto and Home

Operating earnings for Auto and Home were $81 million, up 9 percent due mainly to lower catastrophes. In addition, favorable non- catastrophe claim development related to prior accident years was $14 million, or $0.01 per share, after tax, compared with $16 million, after tax, in the fourth quarter of 2010. Excluding catastrophes, Auto and Home's combined ratio remained strong at 90.2 percent, compared with 90.0 percent. Net written premiums were $740 million, up 2 percent.

International Business

-International operating earnings of $570 million, up 89 percent largely due to the acquisition of Alico

–Total International sales up 12 percent compared with combined MetLife and Alico fourth quarter 2010 results

-Premiums, fees and other revenues of $3.8 billion, reflecting growth in Latin America, Eastern Europe and the Middle East as well as the negative impact of foreign currency exchange rates

Japan

Operating earnings in Japan were $326 million, up 3 percent over the third quarter of 2011 largely due to higher net investment income and both solid underwriting results and improved persistency in accident and health insurance. Compared with combined MetLife and Alico results in the fourth quarter of 2010, sales grew 16 percent. Premiums, fees and other revenues in Japan were $1.8 billion, higher than in the fourth quarter of 2010 (which reflected only one month of Alico results) and relatively unchanged from the third quarter of 2011.

Other International Regions

Operating earnings in the Other International Regions were $244 million, up 17 percent, while premiums, fees and other revenues grew to $2.0 billion. The increases, which were largely due to the Alico acquisition, were partially offset by the negative impact of foreign currency exchange rates. In addition, in Latin America, premiums, fees and other revenues grew due to premium increases in Mexico, Chile and Argentina. Premiums, fees and other revenues also benefited from strong performance in the Middle East and Eastern Europe.

2MetLife acquired Alico on Nov. 1, 2010. Accordingly, Alico's financial results prior to that date are not reflected in MetLife's historical financial statements.

Corporate and Other

Corporate and Other had an operating loss of $104 million, compared with an operating loss of $2 million. Results in the fourth quarter of 2010 benefited from several one-time items, while the fourth quarter of 2011 was impacted by higher expenses.

Investments

Net investment income was $4.9 billion, up 11 percent from the fourth quarter of 2010 and down slightly from the third quarter of 2011. During the fourth quarter of 2011, variable investment income was within the plan range at $247 million ($162 million, after tax and the impact of DAC). In the fourth quarter of 2010, variable investment income was $423 million ($268 million, after tax and the impact of DAC).

For the fourth quarter of 2011, MetLife reported a $213 million, after tax, investment portfolio net loss compared with an investment portfolio net gain of $6 million, after tax.

Separately, MetLife reported derivative net gains of $351 million, after tax, which were largely due to declines in interest rates and gains in the company's variable annuity hedging program. In the fourth quarter of 2010, MetLife reported $1.1 billion, after tax, in derivative net losses. MetLife uses derivatives in connection with its broader portfolio management strategy to hedge a number of risks, including changes in interest rates and fluctuations in foreign currencies. Movement in interest rates, foreign currencies and MetLife's credit spreads – which impact the valuation of certain insurance liabilities – can generate derivative gains or losses. Derivative gains or losses related to MetLife's credit spreads do not have an economic impact on the company.

MetLife is a provider of insurance, annuities and employee benefit programs.

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