How Will MET’s Property and Casualty, Asia Businesses Fare?

MetLife’s (MET) property and casualty (or P&C) business is expected to show an upward trend in 2018. The business’s operating PFO (premiums, fees, and other revenues) is expected to grow at a rate of 1%–2% in the current year.

Over the last 12 months, the property and casualty business’s combined ratio stood at 100%. Management plans to reduce this ratio to 92%–97% within one to three years. A ratio of less than 100% would be beneficial because it would mean that the business was witnessing underwriting profit.

In the current year, MET’s management has stated that the sales in its Asia business are expected to rise at a rate of 5%–6%. However, in emerging markets, it’s expected to witness double-digit growth.

The Asia division’s operating PFO is expected to witness a rise of 2%–3% (on a constant-currency basis) in one to three years. However, in the current year, the division’s operating earnings are expected to rise at the same rate. Over the same period of time, they could rise 8%–9% to 12%–13% (on a constant-currency basis).

On a trailing-12-month basis, MetLife’s operating cash flow stands at $15.9 billion. Its peers (XLF) CNO Financial Group (CNO), Reinsurance Group of America (RGA), and Allstate Corporation (ALL) have operating cash flows of $0.6 billion, $1.6 billion, and $4.5 billion, respectively.