MetLife Weathers Tough Markets as Prudential Life Unit Lags

(Bloomberg) -- MetLife Inc.’s U.S. business helped the insurer weather tough markets in the fourth quarter, while rival Prudential Financial Inc.’s individual life segment in the country reported a loss.

• At MetLife, a tax overhaul and rising volumes fueled a 38 percent gain in adjusted earnings for the company’s U.S. business, according to fourth-quarter results issued Wednesday. Overall adjusted profit rose to $1.35 a share, beating the $1.28 average estimate of 17 analysts surveyed by Bloomberg.
• That compares with Prudential, where the U.S. individual-life segment swung to a loss of $26 million in the fourth quarter, compared with a profit of $98 million a year earlier. Overall fourth-quarter operating income fell to $2.44 a share, falling short of analysts’ estimates of $2.78.

Key Insights

• “While market conditions were challenging in the fourth quarter, our businesses performed exceptionally well overall in 2018,” said Steven Kandarian, MetLife’s chief executive officer who plans to retire later this year. Michel Khalaf will take over as CEO on May 1.
• Earnings at MetLife’s retirement and income-solutions division jumped 106 percent, lifted by favorable underwriting, the U.S. tax overhaul and higher investment margin. Profit in Latin America rose 10 percent, while Asia dropped 9 percent.
• Prudential also has new leadership after Charles Lowrey rose to the top job in December. Lowrey said Prudential has seen “equity market fluctuations, in particular during the fourth quarter”.
• PGIM, Prudential’s investment-management business, boosted assets under management to $1.161 trillion, up $6 billion from a year earlier.
• The “challenging macro environment” and sharply lower equity markets were expected to weigh on earnings across the insurance sector, according to Morgan Stanley analysts Nigel Dally and Bob Huang. The S&P 500 Index declined 14 percent in the fourth quarter.

Market Reaction

• MetLife shares fell to $44 in extended trading at 5:37 p.m. in New York, after closing at $45.20. Net income in the fourth quarter fell about 15 percent from a year earlier to $2 billion.
• Prudential closed 0.5 percent higher at $93.41, up almost 15 percent this year.

Get More

• For more details on MetLife’s results, click here.
• For more details on Prudential’s results, click here.

To contact the reporter on this story: Lananh Nguyen in New York at lnguyen35@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, Daniel Taub

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