(Updates with share gain in first paragraph, Brazil sales in the fifth, capital plan in 10th.)
Dec. 5 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, said earnings will probably climb in 2012 as Chief Executive Officer Steven Kandarian reshapes management a year after the firm’s biggest acquisition. The stock gained as much as 4.5 percent in New York trading.
Next year’s operating profit, which excludes some investment results, will be $4.80 to $5.20 a share, the New York-based company said today in a statement. That compares with the average $5.08 estimate of 20 analysts surveyed by Bloomberg.
Kandarian, 59, is making management changes after taking over in May for Robert Henrikson, who acquired American Life Insurance Co. last year for about $16 billion. Kandarian named former Chief Financial Officer William Wheeler last month as head of a new Americas division and announced the departure of William Mullaney, previously the president of U.S. operations. The new CEO said he was seeking a leader for the Asia division.
“The structure makes sense, and I think that clearly this was the ultimate decision between Bill Mullaney and Bill Wheeler,” said Steven Schwartz, an analyst at Raymond James & Associates Inc. who rates the insurer “strong buy.” Mullaney was “the odd man out.”
Premiums, fees and other revenue will increase by about 5 percent next year to a range of $47.3 billion to $48.6 billion on growth outside the U.S., the insurer said today. Revenue is projected to climb about 20 percent a year through 2015 in Brazil, Russia, India and China, Kandarian said on a conference call today.
Operating earnings will be $5.1 billion to $5.6 billion in 2012, compared with $5.2 billion to $5.3 billion this year, the company said.
The insurer advanced 3.3 percent to $32.80 at 9:45 a.m. in New York. MetLife had fallen 29 percent this year through Dec. 2, compared with the 16 percent slump in the 24-company KBW Insurance Index.
Fourth-quarter 2011 profit will probably be $1.16 to $1.26 a share, MetLife said, missing the average $1.28 estimate in a Bloomberg survey.
“Our industry faced several challenges during 2011 - a volatile macro-economic environment, several natural disasters and an uncertain regulatory environment,” Kandarian said in the statement today.
MetLife plans to submit a fresh capital plan to the Federal Reserve next month after the regulator rejected the company’s proposal to raise its dividend and resume share buybacks, Kandarian said today. He expects to hear from the Fed by the end of the first quarter.
MetLife is subject to Fed oversight because of its size and its ownership of banking operations, which Kandarian has announced plans to sell. Wheeler declined to answer a question on the call about prospects for divesting the business. The 2012 forecast assumes no share buybacks, MetLife said in a presentation on its website today.
The insurer, which had investments of about $500 billion at the end of September, is making more from bond coupons and dividends this year after the portfolio grew with the Alico purchase. Net investment income rose 15 percent to $14.7 billion in the first nine months of the year.
MetLife is seeking to reduce risk on the retirement products it sells as lower interest rates pressure the insurer’s investment yields, Kandarian said on Oct. 28. The company will lower the returns it promises customers who buy variable annuities, Kandarian said.
The insurer’s sales of variable annuities in the third quarter surged 84 percent to about $8.6 billion. When stock markets fall, variable-annuity sellers often are required to shoulder a portion of the losses for their customers. MetLife led sales of the equity-based retirement products in the U.S. in the nine months ended Sept. 30, according to data from trade group Limra.
--Editors: Dan Kraut, Dan Reichl
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