Tags: MetLife | global | growth | MET

MetLife in High Clover On Mortgage Exit, Growth

By Greg Brown   |   Thursday, 10 May 2012 11:37 AM

MetLife (MET) is in high clover with analysts these days, garnering high ratings and generally a positive outlook, in part on M&A in the past few years and on moves to exit the mortgage business and refocus on growth in emerging markets and its large U.S. insurance business.

MetLife is a global provider of insurance, annuities and employee benefit programs, serving 90 million customers in more than 50 countries. MetLife is organized into six segments: insurance products, retirement products, corporate benefit funding, and auto & home, plus Japan and other international regions.

In the United States, MetLife provides a variety of insurance and financial services products — including life, dental, disability, auto and homeowners insurance, guaranteed interest and stable value products, and annuities — through both proprietary and independent retail distribution channels, as well as at the workplace.

This business serves approximately 60,000 group customers, including more than 90 of the top 100 Fortune 500 companies, and provides protection and retirement solutions to millions of individuals.

Outside the United States, MetLife operates in Japan and within Latin America, Asia Pacific, Europe and the Middle East. MetLife is the largest life insurer in Mexico and also holds leading market positions in Japan, Poland, Chile and Korea.

In December 2011, MetLife Bank and MetLife agreed to sell most of the depository business of MetLife Bank. Additionally, in January 2012, MetLife announced it would exit the business of originating forward residential mortgages.

“Once MetLife Bank has completely exited its depository business, MetLife plans to terminate MetLife Bank’s Federal Deposit Insurance Corporation (FDIC) insurance, putting MetLife in a position to be able to deregister as a bank holding company,” management said in a recent filing.

In November 2011, the Company entered into an agreement to sell its insurance operations in the Caribbean region, Panama and Costa Rica. In addition, on Nov. 1, 2010 MetLife completed the acquisition of American Life Insurance Company from AM Holdings LLC, a subsidiary of American International Group (AIG), and Delaware American Life Insurance Company from AIG.

MetLife has a market cap of $36.02 billion in a sector, insurance, where the average company size is $12.59 billion. Its trailing 12-month P/E ratio is 6.40 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.61, compared to 1.64 for the sector.

Its projected earnings per share growth for the coming year is 7.66 percent, lower than the sector average at 12.18 percent.

Execution risk


Analysts are very bullish on MetLife, with buy or outperform calls in from Sandler O’Neill, Keefe Bruyette & Woods, Goldman Sachs, Raymond James, Standard & Poor’s, and Morgan Stanley.

“We view MET's business mix and geographic reach as attractive, but note execution risk remains as MET seeks to exit banking and mortgage operations. The shares, which have declined somewhat of late, now appear undervalued vs. peers,” S&P analysts wrote on April 27, setting a price target of $42.

MetLife next reports on July 26.

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