MetLife, Prudential Report Big Profit Gains
July 31 2019 - 6:27PM
Dow Jones News
By Leslie Scism
The nation's two biggest life insurers posted sharply higher net
income for the second quarter.
MetLife Inc. nearly doubled its second-quarter profit, helped by
improved investment results and derivative gains on a financial
hedging program. At rival Prudential Financial Inc., net income
rose to $708 million from $197 million a year ago. The year-earlier
results were depressed by a net charge of $1.23 billion, primarily
for bolstering Prudential's reserves for long-term-care insurance
policies in a product line it discontinued in 2012.
Both companies are in the midst of transitions to new chief
executives.
Since May, MetLife has been run by Michel Khalaf, who joined the
New York company in 2010 and has extensive experience running
overseas operations. At Newark, N.J.-based Prudential, Chief
Executive Charles Lowrey completed his second full quarter of
leadership after moving to the top job in December from an
international post.
MetLife is the biggest life-focused U.S. insurer as measured by
market capitalization, while Prudential is the biggest by total
assets. Both are leading sellers of life insurance and other
benefits offered by employers to their workers. They also have
large international life-insurance operations, among other
businesses.
MetLife posted a 1% decline to $1.32 billion in adjusted
earnings, which exclude realized capital gains and losses and other
items judged nonrecurring. Adjusted earnings are closely watched by
analysts and investors as a measure of the health of continuing
operations.
Per-share adjusted results rose to $1.38, lifted by stock
repurchases that reduced the number of shares outstanding. MetLife
topped analysts' expectations for earnings of $1.34 a share.
Also Wednesday, MetLife disclosed it would begin a new $2
billion share-repurchase plan.
Prudential posted a slight increase in adjusted operating
earnings to $1.31 billion, or $3.14 a share. That fell below
analysts' expectations of $3.23 a share.
Operating profit increased 53% to $548 million in Prudential's
big business of selling products to employers, but fell 41%to $327
million in operations focused on annuities and life insurance sold
to individuals. Prudential cited negative outcomes in its annual
second-quarter review of assumptions about the profitability of
those lines of business, less favorable underwriting experience and
higher expenses.
MetLife's premiums, fees and other revenue fell 29% to $12
billion. Its year-earlier quarter had a big boost as the company
booked a deal to take on approximately $6 billion in pension
liabilities for 41,000 FedEx Corp. retirees.
Such "pension risk transfer" deals have become important parts
of big life insurers' operations. Many corporate sponsors of
old-fashioned pension plans seek to get out of the business of
managing these big pools of money. But they happen
sporadically.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
July 31, 2019 18:12 ET (22:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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