MetLife Inc. (MET:US), the largest U.S. life insurer, reported a 35 percent increase in first-quarter profit amid derivative gains and international growth.
Net income (MET:US) rose to $1.33 billion from $986 million a year earlier, New York-based MetLife said today in a statement. Operating profit, which excludes some investing results, was $1.37 a share, missing the $1.40 average estimate (MET:US) of 18 analysts surveyed by Bloomberg.
Chief Executive Officer Steve Kandarian, 62, has turned to markets outside the U.S. to boost profits as he scales back from some capital-intensive businesses. The insurer added Chilean pension provider AFP Provida SA last year, after the acquisition in 2010 of American Life Insurance Co., which had operations in 50 countries.
“Growth in international markets, along with accretion from the Alico and Provida acquisitions, should help offset sluggish results in the domestic business,” Jimmy Bhullar, an analyst at JPMorgan Chase & Co., said in a research note this month.
MetLife has declined 2.9 percent this year, compared with the 12 percent drop of Prudential Financial Inc., the No. 2 U.S. life insurer. MetLife rose 1 percent to $52.35 at 4:01 p.m. in New York, before results were released.
MetLife has been scaling back from businesses such as annuities while expanding sales of accident and health coverage and targeting growth in emerging markets. Kandarian’s company agreed in February to sell a U.K. annuity unit to Rothesay Life Ltd. at a loss.
“Businesses that cannot earn their long-term cost of capital destroy shareholder value and do not belong in our portfolio,” Kandarian wrote in a March 18 letter to shareholders.
He said Provida, which the insurer bought for about $2 billion, is “a great strategic fit,” because profits from the business are linked to fees on salaries, rather than assets under management. MetLife has said Provida will add about $200 million to operating profit this year. Kandarian’s company also reached deals last year to expand in Vietnam and Malaysia.
MetLife bought Alico from American International Group Inc. in a $16 billion deal. MetLife was fined $60 million by New York regulators in March after the watchdogs found that subsidiaries it acquired in the deal solicited business in the state without a license. Regulators are still probing AIG, which has criticized the investigation.
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