MetLife Weathers Tough Insurance Market as Prudential Stumbles
May 01 2019 - 7:03PM
Dow Jones News
By Leslie Scism
The two largest publicly traded U.S. life-insurance companies --
MetLife Inc. and Prudential Financial Inc. -- posted divergent
earnings Wednesday as one was able to overcome a tough market in
the first quarter and the other wasn't.
MetLife's profit rose 8% in the last earnings period for former
President and Chief Executive Steven Kandarian. Mr. Kandarian had
been CEO since May 2011. Meanwhile, rival Prudential Financial Inc.
reported a 32% drop in first-quarter earnings as a new CEO
delivered his first full quarter of results.
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 workers, and have large
international life-insurance operations. Prudential is a large
seller of insurance and annuities to Americans.
Prudential's net income was weighed down by higher deferred and
long-term-employee compensation expenses. The higher pay was
related to both corporate staff and the company's PGIM global
investment-management unit, which has $1.22 trillion in assets, it
said
The backdrop to both insurers' quarterly results was a declining
yield on the benchmark 10-year Treasury note, making it more
challenging to deliver strong results on the policyholder premiums
they invest until needed to pay claims.
"Our business performance more than offset some market
headwinds," Michel Khalaf, who became MetLife's CEO on Wednesday,
said in an earnings release.
Prudential's first-quarter results were delivered under CEO
Charles Lowrey, who took the post in December and became chairman
in April. Mr. Lowrey joined the company in 2001 and since 2014
served as chief operating officer of the insurer's international
business.
Mr. Lowrey said the results "increased our book value per share
and generated good business fundamentals."
Among other big insurance carriers reporting quarterly results
Wednesday, Allstate Corp. posted a 42% surge in net income. The big
car and home insurer's results benefited from lower catastrophe
losses, reduced federal taxes and "an unexpected decline in auto
accident frequency," said Chief Executive Tom Wilson.
He said the Allstate and Esurance brands "increased policies in
force, due to higher customer retention and increased new
business."
MetLife's net income rose to $1.35 billion in the quarter, while
closely watched adjusted earnings were flat at $1.42 billion. On a
per-share basis, adjusted earnings rose 9%, to $1.48, reflecting a
stock-buyback program that reduced the number of shares
outstanding. MetLife cited expense management and volume growth for
part of the year-over-year improvement.
At Prudential, based in Newark, N.J., net income fell to $932
million from $1.36 billion in the year-earlier period. Adjusted
earnings declined 6% to $1.26 billion, or $3 a share, from $3.08 in
the year-ago quarter. Prudential cited higher expenses and
disappointing variable investment income, among other drivers, for
its weaker results.
While MetLife's results beat analysts' expectations,
Prudential's fell short.
Adjusted earnings are tracked by Wall Street analysts because
they exclude realized capital gains and losses in insurers' big
investment portfolios and other items considered nonrecurring.
Mr. Khalaf joined MetLife in 2010 through the company's
acquisition of an international life-insurance business from
American International Group Inc. Mr. Khalaf was promoted to
president of MetLife's core U.S. business in June 2017. He
previously was president of its European, Middle East and African
operations.
MetLife's U.S. operations posted an 11% increase in adjusted
earnings. Its operations in Japan and other Asian countries
reported a 9% gain, while Latin American results were down 4%.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
May 01, 2019 18:48 ET (22:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Prudential Financial (NYSE:PRU)
Historical Stock Chart
From Apr 2024 to May 2024
Prudential Financial (NYSE:PRU)
Historical Stock Chart
From May 2023 to May 2024