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What to Expect from Major Life Insurers’ Earnings in 2016

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Earnings outlook

Metlife (MET) is the biggest player in the life insurance industry. It’s expected to report an EPS (earnings per share) of $5.74 in 2016—compared to $4.86 in 2015. The company is expected to post revenue of $70 billion—in line with the previous year. The decline in earnings is expected mainly due to lower investment income, increased competition driving down margins, and increased spending on new initiatives. About two-thirds of MetLife’s revenue comes from its life insurance business. Accident and health insurance account for slightly more than a quarter of the total revenue. The revenue includes total premiums, universal life and investment-type product policy fees, and other revenue.

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Life and retail sales

Prudential Financial (PRU) is expected to report an EPS of $9.81 in 2016—compared to $10.4 in 2015. On the revenue front, the company is expected to post $45 billion—compared to $48 billion in the previous year. The continued strong dollar will impact the company’s international revenue. In 2015, Prudential saw strong growth in US individual life sales. It ended the year with assets under management of $963 billion. In the asset management business, insurers compete with traditional and alternative managers that have considerable assets under management:

  • The Carlyle Group (CG) manages $193 billion
  • KKR & Co. (KKR) manages $98 billion
  • BlackRock (BLK) manages $4.5 trillion
  • Apollo Global Management (APO) manages $163 billion

Together, these companies form 0.63% of the iShares MSCI ACWI ETF (ACWI). Prudential Financial’s product offerings include retirement-related services, mutual funds, life insurance, investment management, and annuities. Prudential Financial offers these products and services to institutional and individual customers through proprietary and third-party distribution networks.

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