MetLife Swings to Loss on Brighthouse Charges
November 01 2017 - 5:22PM
Dow Jones News
By Leslie Scism
Hurricanes reduced the third-quarter results of big insurers
MetLife Inc. and Allstate Corp. with their large homeowner and
car-insurance businesses, while the rallying stock market helped
life insurers industrywide with products tied to market
returns.
MetLife's results, released after Wednesday's closing bell, are
the first following its spinoff in August of much of its U.S.
retail life-insurance business into a new company named Brighthouse
Financial Inc. Separation-related charges of $1.1 billion drove the
company to a quarterly loss of $87 million, versus a profit of $571
million in the year-earlier period.
MetLife also said it would divest its remaining 19% stake in
Brighthouse in 2018 in a move that will return all of the capital
to shareholders. Based on Brighthouse's current market
capitalization, that position is worth about $1.4 billion. That
capital return will be in addition to the $2 billion that the board
added to its share buyback program.
Catastrophe-modeling firms have estimated insured losses from
hurricanes Harvey, Irma and Maria and two earthquakes in Mexico,
which also struck during the quarter, to total $68 billion to $148
billion industrywide.
Allstate's third-quarter results included $861 million of those
costs, a 79% jump from a year earlier. The company touted improved
profits in its auto insurance segment and pointed to a significant
decline in the frequency of auto accidents, which it said helped
offset the big spike in catastrophe losses.
Harvey's extensive flooding meant an unusually large number of
vehicles were damaged, and those costs are covered under many
people's car policies.
MetLife didn't break out its catastrophe costs but said
hurricanes Harvey and Irma were primarily responsible for a 12%
decline in operating earnings for its property-casualty unit, to
$51 million.
During the quarter, insurers enjoyed generally favorable
macroeconomic conditions, so there was less volatility in the
reserves they set up to reflect their obligations to consumers,
analysts said. A rallying stock market helps insurers that have
blocks of variable annuities on their books. Many of these products
guarantee lifetime income streams, and a higher stock market
translates into reduced costs for insurers. They also earn more
fees from the assets under management.
MetLife spun off much of its variable-annuity business but
retains a block of older contracts on its books, while Prudential
Financial Inc. continues as a leading seller of the product to
consumers.
Among the results:
Prudential
Net income surged to $2.24 billion, up from $1.83 billion the
year before. Its operating income increased to $1.32 billion, or
$3.01 a share, from $1.19 billion, or $2.66 a share. Prudential
Chief Executive John Strangfeld cited "record assets under
management and account values" in businesses including asset
management and annuities.
MetLife
Operating earnings declined 14% to $1.17 billion, or $1.09 a
share, from $1.36 billion, or $1.22 a share. It was ahead of
analysts' consensus expectations. Premiums, fees and other revenue
increased 9.3% to $12.61 billion.
Operating earnings in its U.S. unit, which includes
property-casualty and some other businesses, declined 1.1% to $546
million. At the company's big business of selling benefits such as
life and dental insurance to employers, earnings surged 30%. They
were down modestly in many parts of its international business, but
Latin American posted a 23% increase.
Allstate
Operating income at Allstate jumped 24% to $587 million, or
$1.60 a share, from $474 million, or $1.26 a share, a year earlier.
That figure easily beat consensus estimates. Revenue inched up 4.8%
to $9.66 billion, as property-liability insurance premiums
increased 3.2% and net investment income increased 13%.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
November 01, 2017 17:07 ET (21:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Allstate (NYSE:ALL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Allstate (NYSE:ALL)
Historical Stock Chart
From Sep 2023 to Sep 2024