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Magnetar Eliminates Exposure to MetLife

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Magnetar and MetLife

Magnetar eliminated its exposure to MetLife (MET) with the sale of 251,500 shares in the company. The position had accounted for 0.26% of the fund’s third-quarter portfolio.

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Overview of MetLife

MetLife (MET) is a global insurance company that operates in several countries around the world. Although MetLife derives more business from life insurance, it’s a key player in health as well as in the property and casualty spaces. As one of the largest insurance companies listed on the US stock exchanges, MetLife is a part of major indices and ETFs like the Financial Select Sector SPDR Fund (XLF), of which it makes up ~2%.

Diverse revenue streams

About two-thirds of MetLife’s 2014 revenue came from its life insurance business, and accident and health insurance added slightly more than another quarter. Revenue here includes total premiums, universal life and investment-type product policy fees, and other revenues.

In terms of the geographical split, two-thirds of the company’s 2014 revenue came from the United States, and Japan contributed another 15%.

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MetLife is a market leader in the US. Its competitors in the US include Prudential Financial (PRU), Aflac (AFL), and Principal Financial Group (PFG). Apart from the United States, MetLife has operations in Latin America, Asia, Europe, and the Middle East. The company provides life insurance, retirement and savings products, as well as accident, health, and credit insurance in these regions.

Steady operating earnings

MetLife reported operating earnings of $1.6 billion in 4Q14, which was relatively stable compared to the same quarter a year ago. This reflects stable premiums and expense trends. Net income of $1.5 billion was higher than $877 reported in the same period last year as a result of investment and derivative gains during 4Q14. In contrast, these two activities lost money in 4Q13.

MET is also a 9.97% part of the iShares U.S. Insurance ETF (IAK). For a more thorough description of MetLife and its operations, read MetLife – Everything investors need to know.

In the next part of this series, we’ll review the fund’s position change in Western Refining (WNR).

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