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MetLife: Latin America Division’s Operating Earnings Rose

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Foreign exchange rates

MetLife’s (MET) Latin America division saw a rise in its total operating revenue from $3.5 billion in the first nine months of 2016 to $3.7 billion in the first nine months of 2017. 

Unfavorable fluctuations in foreign exchange rates negatively affected the division’s operating earnings in the first nine months of 2017 compared to the first nine months of 2016 as the Mexican and Argentine pesos weakened against the US dollar.

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The Latin America division’s other revenues fell from $26 million in the first nine months of 2016 to $24 million in the first nine months of 2017. The division’s premiums revenue saw a marginal rise from $1.9 billion in the first nine months of 2016 to $2.0 billion in the first nine months of 2017.

MetLife has a market cap of $54.6 billion. Its peers (XLF) Reinsurance Group of America (RGA), CNO Financial Group (CNO), and Allstate Corporation (ALL) have market caps of $10.2 billion, $4.2 billion, and $36.3 billion, respectively.

Why net investment income rose

MET’s Latin America division saw a rise in its net investment income from $809 million in the first nine months of 2016 to $891 million in the first nine months of 2017. The Mexico and Chile regions saw positive net flows leading to a rise in average invested assets, which positively affected the division’s net investment income.

The favorable momentum in the Latin America division led to a rise in its operating expenses and commissions in the first nine months of 2017 compared to the first nine months of 2016. However, a rise in DAC (deferred policy acquisition costs) capitalization largely offset the rise. The division saw a rise in its operating earnings from $421 million in the first nine months of 2016 to $460 million in the first nine months of 2017.

A rise in the Latin America division’s total operating expenses from $2.9 billion in the first nine months of 2016 to $3.1 billion in the first nine months of 2017 negatively affected its operating earnings. The rise was mainly the result of marketing and employee-related expenses.

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