MetLife CEO Sees Challenges, But Reaffirms Growth

Wednesday, 14 Feb 2007 | 3:08 PM ET

The chief executive of MetLife, one of the nation's biggest insurance companies, said the company would face challenges this year because of the current interest rate environment, but reiterated that profit growth would be strong.

After the market closed Tuesday, MetLife said fourth-quarter profit soared as revenue grew and it closed on the $5.4 billion sale of the biggest apartment complex in Manhattan.

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New York-based MetLife reported that net income available to common shareholders increased in the October-December period to $3.83 billion, or $4.95 per share, up from $677 million, or 88 cents per share, in the same period a year earlier. Fourth-quarter revenue rose to $12.89 billion, up from $11.52 billion a year ago.

Operating earnings were $1.1 billion, or $1.36 per common diluted share, compared with $799 million, or $1.04 per share, in the same period last year, the company said.

Beat Estimates

The results beat Wall Street's consensus estimate for profit of $1.18 per share and revenue of $12.64 billion, according to a Thomson Financial survey.

Chief Executive C. Robert Henrikson said on Wednesday that the company faced some headwind in 2007 due to the current interest rate environment where short-term interest rates are higher than long-term rates.

That's because life insurance companies traditionally have invested in long-term bonds and other fixed-income assets, like commercial mortgages, and their returns are depressed when long rates fall. At the same time, they must meet contract obligations on annuities and other products that often are tied to short-term rates.

Henrikson said MetLife has the tools to navigate those difficulties.

In November, MetLife closed on the sale of Peter Cooper Village and Stuyvesant Town--which together form the largest apartment complex in Manhattan--for $5.4 billion. The company said it earned about $3 billion from that deal after income taxes.

The properties were owned by MetLife affiliate Metropolitan Tower Life Insurance.

"Great Quarter"

"MetLife had a great quarter as total revenue reached a record level and operating earnings available to common shareholders increased 32% over the prior-year period," Henrikson said.

In the fourth quarter, the company bought back 8.6 million shares at a cost of $500 million. MetLife said another $216 million is authorized for further buybacks.

Company executives said the international division suffered in the fourth quarter as it restructured its operation in Taiwan, but that earnings would return to normal levels as early as the current quarter.

For the full year, MetLife reported net income available to common shareholders of $6.16 billion, or $7.99 a share, compared to $4.65 billion, or $6.16 per share, in 2005. Revenue rose 9% to $48.39 billion, up from $44.68 billion the year before.

The company's Metropolitan Life Insurance Company is the biggest individual life insurer in North America.

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