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Analyzing MetLife’s Corporate and Other Division

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Jan. 23 2018, Updated 9:00 a.m. ET

Operating earnings

MetLife’s (MET) corporate and other division posted operating earnings of -$522 million in the first nine months of 2017 compared to -$370 million in the first nine months of 2016. 

The division witnessed a rise in its total operating revenue from $263 million in the first nine months of 2016 to $351 million in the first nine months of 2017.

The sources of the division’s operating earnings available to common shareholders consist of other business activities, incremental tax benefits or expenses, other net investment income, corporate initiatives and projects, interest expenses on debt, preferred stock dividends, and other sources.

The contribution from other business activities rose from -$6 million in the first nine months of 2016 to $12 million in the first nine months of 2017. Operating earnings from other business activities rose $17 million mainly because of favorable momentum in startup operations.

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Other net investment income

Other net investment income fell from $172 million in the first nine months of 2016 to $126 million in the first nine months of 2017. The $46 million fall was witnessed mainly as a result of a lower invested asset base. However, falling returns related to investments in alternative assets and real estate joint ventures were also a contributor.

In the first nine months of 2017, the division’s interest expenses on debt stood at -$586 million compared to -$617 million in the first nine months of 2016. The $31 million fall was seen primarily due to maturing senior notes amounting to $1.3 billion in June 2016.

MetLife has a profit margin of -0.74%. Its peers (XLF) CNO Financial Group (CNO), Allstate Corporation (ALL), and Reinsurance Group of America (RGA) have profit margins of 11.4%, 7.3%, and 6.4%, respectively.

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