MetLife Inc. (MET) has forecast a significant improvement in its operating earnings next year, largely attributable to an increase in premiums, cost cuts and improved investment returns. However, the company doesn’t expect to grow at its historical growth levels before 2011.

MetLife expects 2010 earnings per share to grow nearly 50%, to a range of $4.00 to $4.40, or between $3.3 billion and $3.6 billion. The Zacks Consensus Estimate for MetLife’s 2010 earnings is currently $4.11.

MetLife management expects the earnings growth to be primarily supplemented by a 6% to 8% increase in premiums, as it entices customers away from weaker rivals. Also, the growth will be supplemented by increased fees and other revenues, improving investment margins and lower expenses. However, the expected operating earnings for 2010 do not include a possible after-income-tax charge of $30 million, or 4 cents a share.

The company has already achieved its cost savings target of $400 million and raised its forecast for 2010 to $600 million of savings.

MetLife forecasts an operating return on equity in 2010 of 10%, significantly below the 15.2% operating ROE it posted in 2007, before the worst of the credit crisis.

MetLife’s third-quarter operating earnings of 87 cents per share were only a penny ahead of the Zacks Consensus Estimate. This also compares favorably with operating earnings of 84 cents in the prior-year quarter. Operating income excludes after-tax net investment gains or losses of consolidated entities and discontinued operations.

Investment losses and lower investment income continued to hurt results. While we think MetLife should continue to benefit from a diversified business mix and its leading brand, higher losses in the investment portfolio will impact results in the coming quarters.

The company’s capital position remains one of the sturdiest in the industry. However, we are concerned about MetLife’s significant exposure to commercial mortgage-backed securities.

Zacks Investment Research

1. (MHS) Medco Health Solutions Beats – Provides Strong OutlookMedco Health Solutions (MHS) reported third quarter earnings of 75 cents per share, well above...
2. (MWIV) MWI Veterinary Supply Beats – Provides Strong OutlookMWI Veterinary Supply‘s (MWIV) fourth-quarter earnings came in at 53 cents per share, well above...
3. (MET) MetLife Surpasses Consensus Estimates by a PennyMetLife Inc.’s (MET) third-quarter operating earnings of 87 cents per share were only a penny...
4. (MET) MetLife Issues Fixed Rate NotesOn Sep 10, 2009, Metropolitan Life Global Funding I, a unit of MetLife Inc (MET)...
5. (TGT) Target Offers Flu VaccinationTarget Corp. (TGT) recently said that reasonably priced seasonal flu vaccinations will now be readily...
6. (ROST) Ross Stores Offers Upbeat OutlookShares of Ross Stores Inc. (ROST) have advanced more than 3% in afternoon trade after...

Search Posts by Tag: MET | MetLife | Financial | Life Insurance

RSS Feeds by Tag: MET | MetLife | Financial | Life Insurance |

Other Posts by: vitalstocks | RSS Feed for this author