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MetLife’s Asia Division Saw a Rise in Operating Earnings

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Operating earnings

MetLife’s (MET) Asia division posted total operating revenue of $8.4 billion in the first nine months of 2017 compared to $8.3 billion in the first nine months of 2016. 

Foreign exchange rate fluctuations negatively affected the company’s operating earnings, leading to a fall of $7 million in the first nine months of 2017 compared to the first nine months of 2016 as the Japanese yen weakened against the US dollar. However, the Korean won strengthened against the US dollar, partially offsetting the fall in the division’s operating earnings.

The Asia division saw a fall in its other revenue from $45 million in the first nine months of 2016 to $32 million in the first nine months of 2017.

For the last 12 months, MetLife has an enterprise value-to-revenue ratio of 1.06x. Its peers (XLF) Allstate Corporation (ALL), Reinsurance Group of America (RGA), and CNO Financial Group (CNO) have enterprise value-to-revenue ratios of 1.15x, 1.02x, and 1.68x, respectively.

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Net investment income

The Asia division generated net investment income of $2.2 billion in the first nine months of 2017 compared to $2 billion in the first nine months of 2016, which reflects a rise in the company’s average invested assets because of Japan and Korea. These regions saw positive net flows, aiding average invested assets.

The Asia division incurred total operating expenses of $7.1 billion in the first nine months of 2017 compared to $7.0 billion in the first nine months of 2016, mainly reflecting project expenses and a rise in corporate overhead costs. 

The marginal rise in the division’s expenses negatively impacted its operating earnings. Its policyholder benefits, claims, and dividends fell from $3.9 billion in the first nine months of 2016 to $3.7 billion in the first nine months of 2017.

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